Sydtotal

With the combination of one of the Skåne region’s most successful entrepreneurs, a strong corporate culture and Priveq’s ownership expertise, ventilation company Sydtotal began a new chapter in its history. Four years later, under Priveq’s majority ownership, sales had increased from SEK 350 million to SEK 670 million, and the profit margin had improved.

Sydtotal was founded in the autumn of 1999 in Malmö by the entrepreneur Erling Pålsson and five of his colleagues. Erling had already built up and sold a ventilation company and had established himself in Skåne as something of a celebrity in business and sports circles. Right from the start, the founding team decided to offer “a holistic concept in ventilation and comfort cooling”, including turnkey contracts for heating and cooling control and air regulation technology. The companies’ customers included businesses in the construction, real estate and industrial sectors, as well as municipalities and state-owned enterprises.

Growth picked up right from the start and in 2004, an acquisition strategy was initiated, which was based on establishing or buying 51 per cent of local companies in Sweden, while the original owners retained the remaining 49 per cent.

An owner to help the company grow
Priveq bought into Sydtotal in 2007, after the company’s management had identified the need to bring in a strong owner who could contribute to its rapid growth journey. The strong culture that Erling Pålsson’s team had created, in combination with Sydtotal’s clear position in fast-growing areas such as energy efficiency, piqued Priveq’s interest.

From Sydtotal’s perspective, Erling was attracted by Priveq’s history and its ability to work with entrepreneurs. “The change of ownership is part of our work to strengthen Sydtotal’s growth strategy, with a goal of doubling our sales by 2011,” he said, when the deal was completed in 2007. Priveq bought 60 percent of the company while the original owners retained 30 percent.

“An important part of the deal was that the minority owners in the local operations changed their local ownership to own part of the group instead. In this way, we were able to create common incentives and streamline parts of the business more easily, such as purchasing and accounting,” says Henrik Westfeldt, Partner at Priveq.

Strategic growth in Sweden
The aim was for Sydtotal to grow in larger, strategic locations in Sweden. The owners also wanted to increase service sales and to be able to take on larger, national contracts. A new board was appointed immediately after the acquisition. The chairman was Claes Kjellander, who brought his experience from ABB Fläkt and as chairman of Priveq’s portfolio company Byggpartner. The other new appointees were Håkan Modén, who also had been at ABB Fläkt and Jan Svensson, whose background included working at Skandia/If and who already knew both Erling Pålsson and Henrik Westfeldt. Shortly afterwards, Erling, who was previously marketing manager, took over as CEO.

Sydtotal soon bolstered its market reach through several acquisitions in Jönköping, Luleå and Blekinge, adding to its existing presence in Malmö, Ystad, Helsingborg, Växjö, Ronneby, Stockholm, Västerås, Borlänge and Torsby. The company grew quickly, establishing itself in Uppsala and winning prestigious and sizeable contracts, such as supplying systems to the hospital in Malmö, the new underground train stations at Malmö Central and Hyllevi, and to Swedbank Stadium and Friends Arena.

“In addition to the acquisitions, we focused on certain projects, such as streamlining our purchasing operation where we collected larger volumes from fewer suppliers to increase discounts, standardised working processes for the entire group, and invested in the growth of our Stockholm operation, which led to our sales increasing from SEK 45 million to SEK 105 million. It took some time to get started as we had to establish a shared strategic direction, but we implemented almost all of the business plan as it had been set out at the acquisition,” says Henrik Westfeldt.

The company also developed its CAD program. The construction industry has a history of weak project management, with high costs as a result, but all of Sydtotal’s projects, regardless of whether they concern ventilation, cooling or energy optimisation, are coordinated in the company’s own project management system – CAMvent – which runs as a common thread through the business. CAMvent is linked to three-dimensional CAD programs, financial systems, purchasing and production to provide maximum control and cost efficiency.

The investment turned out well. After four years with Priveq, Sydtotal had almost doubled its turnover to SEK 670 million, most of which was organic growth. The profit margin increased from seven to eight percent. By the time that the plan it had established with Priveq was implemented, Sydtotal had developed into a nationwide ventilation instalment company, and it was time for a sale. The buyer was Imtech N.V., one of Europe’s leading technology and service companies, which is listed on the Euronext stock exchange in Amsterdam.

Year of investment: 2007
Fund: Priveq Investment III
Ownership: 59.3%
Year of divestment: 2011

About the company:
Sydtotal offers a comprehensive concept for ventilation and comfort cooling, including turnkey contracts with heating, cooling control and air regulation technology. The company’s customers come from the construction, real estate and industrial sectors, as well as state-owned enterprises and municipalities.

2006
Sales: SEK 374m
EBITDA margin: 7%

2010
Sales: SEK 670m
EBITDA margin: 8%

Priveq team:
Henrik Westfeldt, Karl-Johan Willén

For further information, please contact

Henrik Westfeldt
Partner & Investment Manager
Phone: +46 8 459 67 65
Mobile: +46 70 872 16 66
Email: henrik.westfeldt@priveq.se