Svedberg is a premium bathroom manufacturer with a Nordic market share of 7%. The company supplies complete bathrooms through its four brands: Svedbergs, Macro Design, Cassoe and Roper Rhodes. The group’s strategy is to gain market share through both organic and acquisition-driven growth. Svedbergs aims to achieve annual revenue growth of 10% (including M&A) and an EBITA margin of at least 15%.
Svedbergs has an active M&A agenda, which the company aims to drive an average annual growth of the financial targets of 10%. Exercised correctly with conservative multiples, M&A can aid the company through 1) growth 2) purchasing synergies and 3) margin and EPS accretion.
Given the ambitious financial targets, M&A activities can be a risk to the company. With the ambitious EBITA margin target of 15%, we expect the criterion for acquisitions to be rather strict. With the M&A focus in place, this can lead to 1) high acquisition multiples 2) a price focus leading to a lower quality acquisition or 3) resources spent on M&A processes that ends up leading nowhere. Further, the company is exposed to FX and raw material prices, which have short-term effects on margins.
