In the latest edition of The American Lawyer, Vinge partner Christina Kokko answers a number of questions concerning the Swedish M&A market. Here is a brief selection of some of the most important questions and answers.
How well has the Swedish M&A market withstood uncertainty across Europe?
Compared to the rest of Europe, the Swedish M&A market has been fairly stable over the past few years. Although there has definitely been a significant drop compared to the golden years of 2006-2008, we are still seeing a steady flow of transactions. The recent downturn (Q1) in the Swedish market is generally due to heightened concerns about the debt crisis in the Eurozone last year. This meant that fewer transactions were kicked off and subsequently completed in the first quarter of 2013. The climate is generally more stable now so we expect to see an increase in deals again.
How active are the private equity companies?
Private equity has been incredibly successful in the Swedish M&A market over the past fifteen years or so. Between 2005 and 2008, funds bought the majority of the assets available and dominated the market, making it very difficult for corporates to compete. But the financing market has changed, which has resulted in lower leverage and hence lower bids and thus corporates are now much more visible in acquisitions. There are increasing instances in controlled auctions where corporates have made the highest bid. Examples include AstraZeneca, which sold Astra Tech in 2011 to UK-based Dentsply for USD 1.8 billion, or when Phadia was acquired by Thermo Fischer and Point by VeriFone. Prior to 2011 we had not really seen corporates winning these auctions.
How has the business landscape in Sweden been shaped by private equity?
Swedish companies have definitely benefitted from private equity. Almost 8% of Swedish people working in the private sector are employed by companies owned by private equity companies. It is difficult to predict future trends but it is safe to say that the Swedish private equity model is here to stay. Nordic players have been extremely successful in the past and they continue to be successful in raising new capital for new and even larger funds.