What does your role as the vice president of M&A of the Husqvarna Group entail?
I work with our seven management teams with specific responsibilities for profit and loss within the company. Strategies are a means to reach a goal. After determining a goal for the future, we work backward and see where we are today and the gaps between where we are and where we want to be. We ask ourselves, how do we address these gaps? Do we innovate? Should we set up partnerships, develop something organically, or look at an M&A? We then set a clear and specific strategy that helps us reach our goal.
M&A comes in when addressing these gaps. Buying a business can quickly resolve a missing block that needs to be developed. As part of a business’s toolkit, it is a central part of corporate strategy and business development and an essential process for management teams to reach their strategic goals.
What are the vital factors to consider when evaluating a potential merger and acquisition opportunity?
M&A can create and destroy value, so it is important to approach it strategically.
The first part is having a clear picture of how M&A can create value for a specific business. Much of value creation is in the strategizing phase before an M&A is decided. To identify the right target, the interesting technologies or market positions that can be gained through an M&A need to be ascertained first.
“M&A is a central part of corporate strategy and business development.”
The second part is how the integration of the different entities is approached post-acquisition. Transactions need to be made, depending on the company. For example, if an individual works in a bank, they deal with transactions. But for an industrial company, what comes before and after the transaction is what needs to be the center of focus.
The key factors I look at when approaching a potential M&A is determining what to buy and what targets to look at.
What are some of the challenges that arise during the M&A process, especially while strategizing, and how do you address them?
The challenge is finding the correct strategy for business development.
Husqvarna Group observed that green spaces would be more important in the future due to their link to human health and viable, livable cities. We are riding on megatrends, which puts us in a great position. Ours is a broad business with three divisions that deal in a variety of fields–forest and garden, irrigation and watering, and handheld construction equipment.
For our irrigation and watering division, we are developing technology to reduce water consumption and make irrigation smarter in the future. Part of our forest and garden business is robotic lawn care, where we make electric robots to replace petrol-based machines and manual labor for tending lawns.
M&A supports the overall strategic agenda that we have to grow each of these divisions.
What are some of the technological advancements you find interesting in the M&A industry, and how do you see them continuing to shape the future of the industry?
When I started my career in M&A, there was no technology to support us. We only had physical data rooms, where we manually searched files.
These days, we have online tools like virtual data rooms. That is a major change in a 20- or 30-year horizon that has majorly driven efficiency. Conducting research is significantly easier with the growth of the internet and information being available at our fingertips.
With transactions, we are still dealing with human beings and not technology. We can either save money or be more efficient. However, the M&A’s overall success depends on how well the potential fit of the business that is acquired can be determined and how the newly-acquired staff is integrated into the organization. Having a clear idea of the value creation that should be achieved and being skilled at measuring the outcome of that is vital. The human angle here will still be relevant in the future.
Technology is not a threat but an enabler. It helps us streamline transactions and other processes. The vast goldmine of information available can be confusing, but it helps more than hinders. Technology is something that we actively look for from time to time, which can be acquired through M&A.
Do you have any advice for someone starting in the field of M&A?
It is a fun area to work in. Conventional wisdom cannot be relied on, and you will need to explore different business areas and learn something new every day. When working in general M&A strategy or transactions, the key component required is a strong skill in valuation and cash flow valuation. It is important to master the cash flow analysis, the core of company analysis. It is also crucial to be a team player and an effective communicator. In an industrial setting, you need to work with the stakeholders in your company to build cases for M&A.
