Indutrade

"Lifco: 21-bagger—33% CAGR since IPO in 2014. Indutrade: 50-bagger—22% CAGR since IPO in 2005. Bergman & Beving (including spin-offs): 7,500-bagger—20% CAGR since IPO in 1976. Lagercrantz: 120-bagger—23% CAGR since IPO in 2001. Addtech: 210-bagger—26% CAGR since IPO in 2001. Constellation Software: 375-bagger—37% CAGR since IPO in 2006. Heico: 1,100-bagger—22% CAGR since 1990. AMETEK: 175-bagger—16% CAGR since 1990. Judges Scientific: 115-bagger—24% CAGR since IPO in 2003."

"Rooted in industrial heritage, Indutrade always prioritized successful entrepreneurs that are great operators, the best at what they do. But as the portfolio shifted towards proprietary products, Annvik judged that there were even more possibilities to expand organically. He shifted to acquiring companies in industries with sustainable and structural growth tailwinds. He also pushed deal responsibilities for acquisitions out from headquarters. This increased the pool of people capable of making capital allocation decisions, and with that came a greater number of opportunities. So far, under Bo Annvik’s leadership, the company has grown sales from SEK 13.5bn ($1.35bn) to SEK 32.8bn ($3.28bn). During the same period, EBITA grew from SEK 1.5bn ($15m) to SEK 4.75bn ($475m). The share price has appreciated 300%, beating the overall Stockholm index by a factor of four which increased by 67% over the same period. Buy great companies that generate money—and repeat Indutrade’s business philosophy for creating long-term shareholder value is simple. In the words of former CEO Johnny Alvarsson:"

"One summer, one of Indutrade’s customers—a car manufacturer—wanted to buy 50,000 units of a single product. The firm insisted on getting the price down as much as possible. Instead of agreeing to the deal, employees at an Indutrade company borrowed the technical specifications of the car, and spent an entire holiday cataloging potential improvements. They then returned the report to the customer. One of their suggestions was cutting the number of fasteners in half, saving time and money. Instead of selling 50,000 products at a low price, the company managed to sell half as many products at a higher price and thus higher margin."

"Many family-owned businesses are often hesitant to raise prices, fearing they might lose valuable customers. Indutrade’s experience has shown that the actual risk of losing customers this way is relatively low. The pricing power enjoyed by Indutrade’s companies was well shown when a managing director reviewed the profitability of various products and identified one with an unusually low margin. When he informed the customer that a price increase was necessary, the response was, “This is crazy.” Despite the initial pushback, the customer eventually agreed. A few months later, the managing director realized he had mistakenly raised the price of the wrong product—resulting in that item now having an exceptionally high profit margin."

"What all three CEOs share is a belief that sustainable growth has to generate strong returns on capital, widely exceeding the cost of capital. This has been built into Indutrade from the start. Shareholder value is only created by profitable growth that produces a sufficient amount of cash flow in relationship to the capital that goes into the business. As a result, Indutrade’s only external financial target in the first years was that the return on capital employed should exceed 20%, a target still used today."

"Indutrade operates across five business areas spanning a broad range of industries, all of which are supported by megatrends: Industrial & Engineering, Infrastructure & Construction, Life Science, Process, Energy & Water and Technology, and System Solutions."

"He never bought a business before ensuring the company’s suppliers would trust Indutrade as the new owner. And he always sought to treat potential acquisitions the way he…"

"Alvarsson and Annvik have also added to it by introducing an internal directory listing all group companies, along with the names of managing directors, business segment leaders, and business area managers. This list is accessible to all employees. Networking and collaboration is encouraged across the organization. Beyond strengthening internal connections, the directory has also played a strategic role in acquisitions—potential sellers can contact anyone within Indutrade for a reference."

"Saying no to mediocrity True mastery in multi-decade acquisition-driven growth lies in the discipline to reject mediocrity, prioritize quality, and remain steadfast even when tempting opportunities arise. For 47 years, Indutrade has exemplified this discipline, supported by its long-term owners who have provided stability through both economic booms and periods of uncertainty. At one point, Indutrade’s acquisition pipeline was thinner than usual, prompting the CEO to inform the company’s main owner, Fredrik Lundberg. To the CEO’s relief, Lundberg simply replied, “There’s no need to worry—we’re in this for the long haul, not to maximize the next quarter.” That moment perfectly captured the essence of Indutrade’s long-term mindset."

"As new CEO, Bo Annvik grasped that to continue to grow Indutrade profitably without compromising returns on capital, even more capital needed to be deployed outside the Nordics. He needed places where the competition for deals was lower, but the quality of acquisition targets and price dynamics remained as attractive. It might have been easy to fall into deals for the sake of deals and scale for the sake of scale. But Annvik displayed his value investing skills: he sought the best deals at the highest returns, irrespective of business area or geography. He was always looking for the best long-term value for money. This was largely found outside the Nordics, with 60% of acquisitions completed in other countries."

"Acquisitions are essentially a “people game,” and Tindberg’s feel for personalities and relationships de-risked his acquisitions. He promised prospective sellers that he would help improve their businesses, and his background as an entrepreneur made him trustworthy. He stood apart from financially minded buyers in suits and ties. He was resolute in only buying businesses that met his stringent criteria: recurring-like revenue streams, high technical expertise, best-in-class products, and a potential of reaching a 10% margin. To him, these were signs of a high quality trading company. He explains to us that his belief was that “people and numbers are interconnected.” Great people tend to drive great financial performance. Gunnar’s “secret” was to find entrepreneurs sharing same core values, and to grant them freedom. This remains the north star of Indutrade’s philosophy. It is no coincidence that frugality"

"In 1989, Industrivärden made sure that any parts that were not focused on specialized industrial trading were sold off. It retained Dacke Component, a trading company of small and mission critical industrial components like valves, transmissions, filters and other similar products. Dacke was renamed Indutrade in 1990, with Gunnar at the helm."

"“Indutrade has achieved steady growth since its start more than 35 years ago, and the key to our success is our focus on generating positive cash flow. With the money we earn we buy quality companies that generate more money, which enables us to buy more quality companies—it’s that simple. This is how we grow and succeed at generating capital for new acquisitions as well as for a return for our shareholders.”"

"With no strict limitations to a single vertical, Indutrade enjoys the flexibility to be highly selective—acquiring only businesses that align with its criteria. It typically pays 5–8× EBITA multiples, thanks to its focus on smaller, less competitive targets with annual revenues between $5m–50m."

"Indutrade into the UK and the DACH (Germany, Austria, and Switzerland), where competition for deals was less fierce compared to Sweden. A"

"With a playbook continuously refined and improved over five decades through trial and error, Indutrade has built a well-oiled acquisition engine."

"Alvarsson saw that acquiring this type of company could not only increase their growth runway, but make the company more diversified and resilient in the process. Product companies offered greater scope for international expansion and organic growth compared to trading companies, which were usually local businesses. So redirecting acquisitions towards them would, with time, paradoxically make Indutrade’s"

"When a promising opportunity arose, he moved swiftly to capitalize on it. His vision of making Indutrade a company built for entrepreneurs by entrepreneurs was being realized."

"Indutrade’s international expansion also intensified under Alvarsson. He reduced overexposure to the Nordics by acquiring companies in geographies with similar cultures and values. He made a point of this by saying he would “never acquire companies in a country that has a beach facing the Mediterranean.”"

"wisdom while maintaining autonomy, would solve these issues. The success of its international expansion was pivotal for Indutrade."

"We began this chapter with Johnny Alvarsson saying that the products Indutrade sold “should not be bigger than horses.” Selling small and mission-critical products has always been its winning formula, and has created profound value for Indutrade’s shareholders."

"For Indutrade, success is not just about securing deals at low multiples—it is about acquiring the right companies without compromising on quality or cultural fit. By prioritizing long-term profitable growth, Indutrade has fostered continuous, incremental improvements in its subsidiaries post-acquisition—whether by raising prices or jettisoning unprofitable customers."

"From the very beginning, Indutrade has been built on a foundation of autonomy and entrepreneurship. When Gunnar Tindberg embarked on Indutrade’s expansion journey, he drew upon his industrial expertise, business acumen, and experience from his own family-owned business. He knew that success would come from one simple promise: if they sold their companies to Indutrade, he would help them grow and develop."

"Indutrade’s dedication goes beyond acquisitions—it also nurtures growth from within its own ecosystem. Take Colly Flowtech, for instance. Founded as an internal start-up in 2007, the company has grown into a leading distributor of valves, hoses, and pumps, now generating close to SEK 300m ($30m) in annual revenue. It stands today as one of Indutrade’s most successful and profitable ventures, and an example to inspire the rest of the group."