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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