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Sve Suo Eng
Sve Suo Eng

Our companies

Focus on profitable and growing industrial technology companies with strong market positions and sustainable competitive advantages

  • Business area and company type. Our investment focus is on B2B industrial technology companies that can be defined within the scope of our two business areas, Product companies or Niche production. We typically avoid general distributors that do not have their own products or systems that are dependent on third-party suppliers.
  • Size and profitability. We focus on small and medium-sized enterprises (SMEs), normally with a turnover between SEK 50 and 350 million. Potential acquisitions must have a long financial history of profitability and demonstrate an EBITA in excess of SEK 10 million and an EBITA margin above 10 percent.
  • Geography. We are mainly active in the Nordic region. Karnell will continue to have a distinct focus on the Nordic region but does not rule out acquiring companies outside the region if the conditions are met for our selective process, acquisition criteria and overall strategy.
  • Financial and operational stability. Companies must have stable and predictable revenue streams. These conditions requires that the business is not sensitive to economic cycles through its exposure to certain end markets. Thus, in order to run the operations as efficiently as possible, the financial history and, in particular profitability and cash flow generation, are carefully evaluated before the acquisition.
  • Strong market position and sustainable competitive advantage. Companies must hold a significant share of the market in comparison with competitors. In addition, there must be competitive advantages that are deemed to be sustainable in the long term and that can defend the company against existing and new players in the space. Competitive advantages include high barriers to entry into the market itself, high turnaround costs or very established customer relationships. The product portfolio should be characterised by a high degree of innovation and be supported by technological development, but at the same time not be too R&D-intensive.
  • Scalable business model with growth opportunities. The businesses to be acquired must have a growth strategy with several means to drive growth in the future. Examples of growth drivers that we evaluate in conjunction with our acquisitions include potential growth through new product launches, increased number of sales points, expansion of the customer group, increased customer penetration of existing customer groups, and the opportunity to expand into other verticals and geographies.
  • Owner and seller. We prefer to acquire businesses directly from the entrepreneur who founded and developed the business from scratch. We strive to always have the entrepreneur operationally involved in the business for some time after Karnell acquires the business. We believe that there are many advantages to retaining the entrepreneur as a member of the management team or board of directors as they typically have a deep insight and knowledge of the business and the market as well as established relationships that often take time to achieve.
  • Competent management team. An important criteria when evaluating companies is the existing management team and its ability to execute the strategy going forward. Usually, we look for a management team with experience in the market and the sector in which the company operates, experience from similar positions in other companies and in-depth knowledge of the company and the business model. To avoid becoming too dependent on key individuals, we often evaluate the business itself, which should not be too complex so that the dependence on key individuals is mitigated.
  • Other criteria. Karnell is on the constant lookout for markets that offer room for future growth opportunities, which at the same time have relatively high barriers to entry and/or whose size does not attract international or global players. In addition, we evaluate possible investments based on their position relative to industry trends that we consider significant for industrial technology going forward.

Product companies

The business area Product companies includes product-owning companies that wholly or predominantly base their operations on products, which may include various rights such as trademarks, patents, etc. The product offerings are characterized by having a clear technological base within niche applications that create a strong identity and loyal customers. Karnell has limited its investment focus to product-owning companies within hardware, chemicals and software.

Niched manufacturers

The business area Niche production includes niched manufacturers with a high degree of specialisation in their expertise of manufacturing smaller product series, often in close dialogue with customers. The companies typically possess expertise in a very specific area (niche) and can thus add much value for its end customers. These traits are expected to enable long-term and established customer relationships which creates resilience to existing and new competition.

”In Karnell we get a strong strategic and financial partner to strengthen our market position further”

– Mikko autio, CEO AT KL Mechanics

Do you want to be a part of Karnell?

Welcome to contact us.

Petter Moldenius