In this Business Breakdown, David Barbato sits down with Teqnion's (TEQ.ST) CXO, Daniel Zhang.

Daniel Zhang is CXO at Teqnion, a Swedish serial acquirer of niche industrial businesses. He joined in 2020 after five years at Bain and now runs the company's M&A, speaking with three to five business owners a week.

In this episode, Daniel explains why Teqnion buys physical product companies rather than service businesses, how it pays around five times EBIT when the market pays closer to eight, and what the China sourcing office he set up has done to costs across the group. He also covers the operational problems that hit roughly ten subsidiaries, where that turnaround stands now, and how Teqnion's bonus structure penalizes managers when earnings fall.

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Chapters

00:00 Introduction

01:55 What makes Daniel tick

04:56 Finding Teqnion as a shareholder and joining Johan Steene

06:57 From a placeholder title to running M&A

10:30 Bain vs. Teqnion: strategy versus implementation

12:44 Why niche physical products over services

15:11 The ideal company: mission-critical components with service attached

17:53 Building the China sourcing office

21:38 What Teqnion actually sources from China

23:15 Winning over subsidiary CEOs and the savings realized so far

26:19 Could Teqnion acquire in China?

28:52 Buying from owners who are ready to retire

30:31 Why sellers accept less than the highest bid

33:47 Walking away on price

35:06 Funding acquisitions and the leverage target

37:01 Why subsidiaries carry no debt, unlike private equity

40:02 Deal sourcing: cold calls, brokers, and direct outreach

42:54 Where Teqnion's returns have come from

45:33 How serial acquirers fail

50:13 Where the turnaround stands now

53:18 Rising margins and what Teqnion buys next

55:40 The board's role and the mandate that unlocked M&A

58:09 Inside the incentive structure, including negative bonuses

1:01:47 CEO days, clusters, and sharing best practices

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Teqnion AB (TEQ.ST): Inside a Nordic Serial Acquirer

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Teqnion AB (TEQ.ST): Inside a Nordic Serial Acquirer