EQT's business model allows the portfolio companies to develop and grow with a high sense of urgency. Consensus around strategic direction for a company is a prerequisite, since the partnership with management and the Board of Directors is key as they run and develop the business. Once a company has been acquired, EQT appoints a Board of Directors, which in turn apply EQT's corporate governance model and, when needed, the management team is strengthened.
The strategy acts as a roadmap for value creation and progress is closely monitored. Key strategic measures typically include:
Market and product expansion – targeting new customer groups or broadening the product offering, which could mean new products in existing categories or applying a proven technology to new product categories or uses.
Internationalization – a key benefit of EQT ownership, given access to the extensive international network of Industrial Advisors.
Bolt-on acquisitions – step-by-step expansion by acquiring competitors or companies with similar or complementary products, technologies or market presence. The ambition is often to achieve economies of scale and drive internal efficiencies. It may also mean driving consolidation of a fragmented industry.
Access to broad expertise in industrial management helps the portfolio companies to increase efficiency and profitability. State-of-the-art benchmarking and assessment methods are installed. The ambition is typically to become “best-in-class” in such areas as production, customer relations and service.
Utilizing changing industry dynamics, investing in future technologies and divesting non-core businesses, to create a base for rapid expansion.
Optimizing capital structure
EQT also has the financial expertise that can be applied to create efficient capital structures and, ultimately, to prepare the improved company for the transition to a new owner.