Teqnion is an unusual company. You notice it almost immediately when reading their annual report: from funny faces of their founder-CEO to quirky comments from Daniel (Deputy CEO), that's markedly different from the polished annual reports I am used to read. Besides their funny look and feel, don't get mistaken: the executive team is incredibly focused on shareholder value.
I've decided to start a long position for the following reasons:
- Incremental return on invested capital is trending upwards and now above 20% - Although they've made bad acquisitions in the past and admitted learning from these (from acquiring contract manufacturers with tight margins, being exposed to cyclical industries such as housing), management is refocusing its acquisition strategy towards "product" companies in niche industries with strong pricing power. The incremental return on capital is improving markedly as a result: from less than 5% in 2024, they've reached 25% in Q3 2025 and 21% in Q4 2025%. My definition of normalized operating profit excludes the goodwill impairment due to the legal dispute with Reward Catering in 2025 (as a non-cash expense). An interesting aspect will be to dissect the breakdown of this ROIIC between organic growth vs acquisitions - this will be for a later post!
- A enormous runway for growth, enabling a reinvestment rate above 100%: Europe has millions on industrial businesses which could be a potential fit for Teqnion. Although the serial acquirer model is well established in Sweden (home of Lifeco and other serial acquirers) with fewer quality acquisitions realistically available in Sweden, they've shifted gears to the UK with a new country structure that sets them up for growth (head of UK and head of Sweden). Teqnion's historical reinvestment rate was 117% in 2024 and 349% in 2025, while maintaining their Net Debt / Ebitda at 1.6x as of end of 2025 (below 2.5x target)
- A FCF yield at 6.4% as of end of 2025 (versus 4.2% median since 2019). The FCF yield is also higher than other serial acquirers such as Lifco and Heico at 2-3%. You're essentially getting a serial acquirer 2-3x cheaper than the more established serial acquirers, which reflects the increased "risk" that Teqnion is still a young company (but i believe has more upside!)
- Well-aligned management incentives: Johan owns about 5% of the stock (134mSEK at the time of writing) and Daniel owns 0.6% (17mSEK) so it makes incentives super aligned with individual shareholders. They repeatedly mention that their objective is to double the EPS every 5 years, with a strong long-term mindset.
- Their moat : a culture of humility, decentralization and grinding I believe the "moat" of this company is the unique culture and mindset of Johan and Daniel, that was cascaded across the organization. Daniel's analytical skills (in charge of acquisitions) complement Johan's people skills. Their communication style is transparent, humble and pragmatic. In podcasts/interviews, Johan and Daniel talk extensively about a culture of decentralization "Trust but verify" and their love for "grinding". Johan is an ultra-runner, see here for his achievements. His drive coupled with his low-ego are fairly unique to me.
I'll leave you with this quote from Johan Steene, Teqnion's founder and CEO which summarizes the unique culture at Teqnion:
I truly believe that we are special cause we love our team. We love to build great things, and we love to be at our best. The Teqnion management team only exists to do tough tasks, support the subsidiaries and make the group more robust and more profitable. Since we cost money, we need to put more value in through work. We try very hard to perform well for the group, not for ourselves.
I do not quite understand how it became like this, but I love it.
We know that true change comes from tens of thousands of small improvements, not by a few big strokes. Thousands of small nudges that turn into sustainable improvements and mastery. The culture is true to decentralization. We are much faster since we are always closer to where a decision should be made. We love the deals, and we cherish the people doing them.