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TIP713: Why Serial Acquirers Outperform w/ Niklas Sävås

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Apr 11, 2025
Guest
Niklas Sävås
Niklas Sävås, a senior equity analyst at Redeye AB, dives into the intriguing world of serial acquirers—companies that thrive by strategically purchasing others. He discusses why these businesses can outperform market norms, emphasizing best practices that lead to successful acquisitions. Sävås highlights the crucial factors of cash flow and competitive advantage while explaining the unique dynamics of acquisitions in both Nordic and US markets. He also touches on the challenges these acquirers face and the significance of organic growth.
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INSIGHT

Serial Acquirers' Strategy

  • Serial acquirers, like Berkshire Hathaway and Constellation Software, profit by repeatedly acquiring other businesses.
  • This strategy has proven successful in the stock market over the past two decades.
INSIGHT

Defying Conventional Wisdom

  • Conventional wisdom says that most acquisitions destroy value due to overreliance on synergies and empire-building.
  • Successful serial acquirers defy this by focusing on smaller private companies with lower multiples.
INSIGHT

Private Company Valuations

  • Private companies are often available at lower multiples than public companies because they lack organic growth opportunities.
  • Rational buyers avoid overpaying, ensuring sustainable cash flow for future acquisitions.
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