I’ve skipped Röko’s thread several times while browsing Inderes, but curiosity finally got the better of me, and this turned out to be a rather interesting case. There’s clearly strong expertise behind it, and I’m always fascinated by the idea of decades-long compounding stories in serial acquirers.
I’ve now superficially researched the company, and one thought-provoking aspect relates to Röko’s model of keeping the incentives of acquired company owners aligned with the group. Röko typically buys a majority stake and leaves a significant minority share to the founders. Often, there’s also a condition that Röko will later buy out the remaining shares, or alternatively, the owner has the right to sell them. In the medium term, incentives are clearly aligned because the founder still has a significant financial stake in play. But what happens after Röko buys the rest? The founder will likely step aside, and a salaried management will take over. In such cases, the entrepreneurial spirit may inevitably weaken when the business is no longer “their own” in the same way. I don’t know how far these option structures extend, but in the long run, this could impact the culture and performance of the subsidiaries. This, however, seems to be a fairly common challenge for serial acquirers, and even more so for those who buy companies entirely immediately. What then is the best way to operate, or does such a way even exist?
Another thing that puzzles me a bit with many serial acquirers is the scarcity of organic growth. Röko’s Q4 presentation shows that organic growth has been moderate over the last four years: 2022: 8%, 2023: -2%, 2024: 2%, and 2025: 2%. Why doesn’t a compounder buy compounders? On the other hand, if targets were growing strongly organically, acquisition multiples would be on an entirely different level than, for example, EBITA x8. But does modest organic growth indicate that companies operate in such narrow niche markets that simply no more growth is available, or that the companies genuinely lack competitive advantages? In Röko’s case, an EBITA margin of about 20% would nevertheless suggest some pricing power. For example, with Teqnion, I often wonder if the holdings are of poorer quality and lack clear competitive advantages, and there, margins are also lower. On the other hand, it might also be that precisely such a combination (moderate growth + reasonable acquisition price) yields the best return on capital, as investments pay for themselves quickly, but it would be nice to see a bit more organic growth.
And what kind of a player is this new CEO really? I haven’t had time to watch Bladh’s interviews much yet, but Karlsson certainly hypes him up. With Bladh becoming CEO, the CFO position is taken by a 27-year-old named Douglas Kressner. He could, of course, be a very capable person, but I find it a bit odd that a nearly freshly graduated person rises to the CFO position of a publicly listed company. In many companies, the CFO plays a very strategic role. There are, of course, differences between companies in the scope and criticality of that role, but I’m somewhat puzzled by this decision.
Every now and then, I get excited about a new company, and this seems to be the latest case, even though a few things I didn’t care for about the company have already emerged. My usual way is to take a small initial position very quickly if, after light familiarization, the business seems interesting and the valuation at least reasonable. After that, deeper familiarization begins, and often these companies end up being sold within a few months, but sometimes longer-term holdings are also found. Could this be one of them?