tbd30’s operations will initially be focused on identifying and evaluating potential business combinations with target companies operating in business services – more exactly services sold to companies and organizations. There are strong trends that justify giving particular attention to this sector. Businesses and organizations choose to an increasing extent to focus on their core business and therefore increasingly purchase services from external players in preference to producing these services internally. This is an ongoing specialization process that has over time created service-producing specialists within various sub-segments with differing content and level of development.
The continuously expanding business service sector has generated a number of large companies and new ones are joining all the time. Even though the sector includes many different sub-segments and types of company, business services has overall demonstrated considerable power of resistance and ability to deal with turbulent and challenging macroeconomic changes. This has led to increased interest in the sector from investors.
Business services extends over a large field and includes a broad definition from qualified specialist services as management consultants to services which do not require access to skilled labour such as cleaning. Certain business services require large tangible or intangible investments, at least initially while other businesses such as the banking sector require large balance sheets.
In the course of time, business services have included sector specialists with an increasing degree of sophistication at the same time as models for conducting business and creating revenue have been developed. This may involve hour-based revenue models that have or can be developed into models based on contracted deliveries of services that are provided over longer time periods. Other services have or may be developed into package or holistic solutions for which hire or administration fees are charged. Other trends are an increased focus on quality with regard to reliability of delivery and service and more developed and advanced methods for measuring customer benefit
The sector has, like the rest of society, been confronted both by challenges and opportunities apace with digitalization. This has placed demands on adaptation of operations and business models to enable the company to compete successfully. It is not expected that there will be any slackening of the pace of digitalization. Rather the opposite, which makes demands for continuous and ongoing development and adaptation to be able to meet customer needs and demand. There are great opportunities both as regards attractive sub-segments and particular companies but also in how value can be created.
Overall, business services are considered to be able to offer good opportunities for tbd30 to identify, evaluate and acquire a target company in the sub-segment which is considered to be among the most interesting.
tbd30’s investment criteria
On the basis of the focus on business services in the B2B (business-to-business) segment, tbd30 has established a number of more specific criteria for a target company to qualify for a potential investment.
Overall, the focus is placed on business activities that provide clear added value and customer benefit as well as having a business model that is scalable and growth-focused which together mean that continued growth in revenue can provide good prospects for improved profit margins. A suitable target company can be found in several different industries. The services sector consists of management services, administrative, operational and maintenance services, mediation and transaction services as well as consultancy, information and business support services, including application software and similar technology. This is not an exhaustive list and other services segments may also be of interest. The majority of these services can involve services that are packaged as solutions such as application software or systems
Companies that are capital intensive or which are based on large balance sheets do not come into question for tbd30.
The target company is to be based in the Nordic countries with business in several countries with a clear potential for continued geographic expansion. It must have a strong market position in its segment with a multi-year record of growth and profitability.
The target company must demonstrate prerequisites for good organic growth. Typical revenue can consist of fees and charges including licence fees, commission payments, hire charges etc. A considerable portion is to consist of recurrent revenue and be to a great extent based on long-term contracts with the possibility of expanded business through additional services. There must be scope and a clear agenda for consolidation in the sector by business combinations and mergers in both existing and new markets.
The size of the target company shall entail a transaction value of around three to five times the capital base of tbd30 at the time of the business combination, corresponding to approximately SEK 2 to 5 billion. The company may also decide to carry out a business combination with a company value outside this range.
Digitalization shall be an integrated part of the target company through investments being initiated or carried out to modernize its infrastructure and administrative systems. Processes and working methods in the modernization shall, inter alia, include sales processes working up new and potential customers, flexible routines for registering new customers and administration.
The target company must have a strong, competent and sound management. In the analysis of target companies, evaluation will also be made of the prerequisites for conducting long-term work with sustainability at a high level and complying with the ethical guidelines applied by tbd30.
The target company may be owned today by the original founders, by risk capital or by a larger group of owners with another core business. Through a potential business combination with tbd30, a smooth transition to a limited company will be achieved quickly and efficiently for the owners of the potential target company.