Acquisition process

In order to ensure that acquisitions can be completed with the right orientation, high quality and on the right terms and conditions, a structured acquisition process consisting of five phases is used:

The gross list

In order to maintain a high rate of acquisition the Group must have a steady stream of acquisition targets to process. The gross list is a centrally prepared list of all acquisition targets identified by the Group. The list comprise about 100 target. It is updated on an ongoing basis and is based on the acquisition opportunities identified in the course of the subsidiaries’ and the Group’s day-to-day market contacts in each respective industry. For each company on the list, there is a person responsible to follow that company’s development.

Contact

An unprejudiced contact is taken with the company and/or its owners when the timing is right. The contact phase often takes time, since it is really important to get to know the business and its owners, its earnings potential and if there is potential for co-operation. At a later stage of the contact phase documents are prepared that briefly describe the background, idea and motives behind the acquisition, the market position, the economic prerequisites, the price range, a time-line and a project plan for consummating the acquisition. This is presented to the management group and in competition with other acquisitions proposals, allocation of time and resources to go forward with the acquisition is approved.

Analysis and negotiation

The analysis and negotiation phase commences after the Group’s management group’s approval. This involves a careful analysis of the industry, the market and the company, and that a plan is prepared together with the seller for a common future. Negotiation of terms and conditions are begun. The analysis and negotiation phase should be kept short and intense, which normally means duration of two months. The final negotiation phase Due diligence is performed in this phase and final negotiation of the purchase agreement. The purpose of due diligence is to ensure that the company is of the quality expected, to ensure the earnings capacity, to identify any disputes and other risks in and outside of the balance sheet. An integration plan for the period immediately after the acquisition is prepared.

Integration

After approval of the acquisition by the Board of Directors, an agreement can be signed. The job of implementing the integration plan is begun soon thereafter. The company is also integrated immediately into the Group’s reporting routines for order bookings and monthly financial statements. No later than within one quarter, a presentation of the Lagercrantz Group, its vision and corporate philosophy is made with all personnel.