By providing access to thorough ownership skills and operational expertise, EQT can help acquired companies grow and prosper.
EQT invests in good companies across the world with a mission to help them develop into great and sustainable companies. By providing access to ownership skills and operational expertise, EQT can help acquired companies grow and prosper, both under EQT's ownership and with future owners.
The portfolio companies develop and grow through the implementation of strategies geared towards growth and operational excellence. The strategies are driven by the appointed CEO and board members, generally from the EQT Network, and monitored by the Investment Advisory Professionals.
Development and growth is the core of the value creation. Sales growth and margin expansion are achieved through multiple strategies, including geographic expansion, new products, acquisitions and strategic re-orientation.
The most tangible result of the EQT Business Model is that EQT's portfolio companies have on average increased revenue growth of 10%, earnings growth (EBITDA) by 12% and employees by 7% annually during EQT Funds' ownership. Almost all of the return on investments is attributed to operational improvements such as increased sales and efficiency gains.
EQT has a long-term ownership approach and stands by the portfolio companies in good times as well as bad. The decision to hand over the portfolio company to a new owner is only taken once the development plans have been accomplished. The average ownership period for EQT funds is 5.0 years.
There are typically three ways to hand over a portfolio company to a new owner:
- Initial public offering (IPO) – floating part or whole of a portfolio company on a public stock exchange. The EQT funds often stay on as a substantial owner for a period of time
- Trade sale – selling a portfolio company to an industrial buyer
- Secondary buyout – selling a portfolio company to a financial buyer
For EQT, Trade Sale has been the most common route followed by Secondary Buyout and IPO.