Teqnion: Stamina, Endurance & Acquisitions
Can Johan Steene's marathon mentality build a lasting compounding machine?
DISCLAIMER & DISCLOSURE: The author has no position in Teqnion at the time of publication, but that may change. The views expressed are those of the author at the time of publication and may change without notice. The author has no duty or obligation to update this information. Some content is sourced from third parties believed to be reliable, but accuracy is not guaranteed. Forward-looking statements involve assumptions, risks, and uncertainties, meaning actual outcomes may differ from those envisaged in this analysis. Past performance is not indicative of future results. All investments carry risk, including financial loss. This analysis is for educational purposes only and does not constitute investment advice or recommendations of any kind. Conduct your own research and seek professional advice before investing.
Acquisition-as-a-Business (AaaB)
This is now the third post in the ‘AaaB’ series. If you missed the others, here are the links:
Relais Group investment analysis
Fairfax India (podcast/video presentation)
Topicus - Part 2 - How to value Topicus
Judges Sceintic (podcast)
Fairfax India analysis to compliment (4) above
Teqnion
Teqnion ($TEQ.STO) is one of Sweden’s newer programmatic acquirers, founded back in 2006 by Johan Steene and Jonas Häggqvist. From the start, the company has embraced a philosophy of highly decentralized management, taking cues from other Swedish success stories like Lifco and Addtech.
Steene, still at the helm as CEO, puts it simply: Teqnion doesn’t just invest in companies, it invests in people. The mission is to give founders a “safe harbour,” a place where their life’s work can be preserved and carried forward.
If that rings a bell, it should. It’s straight out of the Warren Buffett playbook. But there’s an important caveat here. Quoting Buffett is easy. Actually delivering on that philosophy is another challenge entirely.
So, has Teqnion managed to pull it off? Let’s take a closer look.
The Architect and His Vision: Johan Steene
A big part of Teqnion’s investment case comes down to leadership and in this case, that means co-founder and CEO Johan Steene. He’s no ordinary chief executive. With a beard that could rival Mark Leonard’s and a hobby of running ultra-marathons for fun, Steene is a character who thrives on pushing limits. And he’s proven, both in sport and in business, that he has the grit and endurance to keep going long after others would have given up.
To give you an idea of his stamina - in July 2017, Steene ran more than 266 kilometers (over 165 miles) in a single day. That effort earned him a silver medal at the World Championships in 24-hour running, and along the way, he set new Swedish and Nordic records. That’s the equivalent of running more than six marathons back-to-back. If you’re looking for a CEO with staying power, this is your man.
That same endurance mindset shows up in his business philosophy. Steene believes true value comes from acquiring and nurturing small, high-quality companies with lasting fundamentals. He’s fond of saying that Teqnion invests in people, not companies, and he emphasizes qualities like commitment, attitude, and willpower just as much as financial metrics. This people-first approach is deeply embedded in Teqnion’s culture and underpins its decentralized model, where founders and management teams are left to run their businesses with minimal disruption. By doing so, Teqnion avoids messy integrations and keeps the expertise that made those businesses attractive in the first place.
Steene himself describes his role as that of a “business-building, risk-taking, win-win deal lover.” It’s a very hands-on, entrepreneurial mindset, and one that has been central to Teqnion’s growth.
He also acknowledges his own evolution, from a more by-the-book operator in the early days to a flexible, opportunity-driven business builder today.
Of course, leadership at Teqnion isn’t a one-man show. Daniel Zhang, now Deputy CEO and CXO, deserves special mention. He joined in 2021, initially heading M&A and serving as interim CFO, and he was so integral to the company that he was elevated to the number-two role, Deputy CEO just three years later. Zhang has been instrumental in raising capital, optimizing M&A strategy and focusing on acquiring profitable companies that align with Teqnion’s long-term culture and shareholder commitment.
Zhang’s background is impressive: stints at McKinsey and Bain Consulting, senior strategy roles at Textilia, and he has even authored a book on investment mental models, An Investment Thinking Toolbox. He is a committed Buffett disciple, he manages his own investment portfolio, is an avid reader always anxious to learn from others and constantly pushes himself to improve.
In 2024, he backed that conviction with his wallet, buying 100,000 shares from Steene at 202 SEK per share, nearly 50% above where the stock trades today. That move boosted his stake to 108,000 shares, compared with Steene’s 861,471. What’s striking is Steene’s reasoning for selling: he wanted Zhang not just to feel like a partner in spirit, but also in ownership. In his words, “I have the best job in the world. It got even better since Daniel joined us. The fact that we are now doing things together, arguing about new ideas and accelerating our journey pushes both me and the company. It goes without saying that Daniel should not only feel that it is his company, but that he is also an owner and shares in the long-term success. Even though I have never sold before, it is not with sadness but with hope for the future and joy that I am now selling a part to our unique CXO.”
Here is a quick elevator pitch for Teqnion from Daniel Zhang, explaining the business model himself:
If you’re thinking about succession planning, Zhang looks very much like the heir apparent, although it should be noted that Steene shows no signs of stepping down anytime soon - he’s only 52 and says he wants to keep doing this work for as long as he can contribute. Given his stamina, he could still be leading Teqnion decades from now. But whenever the baton is eventually passed, Zhang seems positioned to carry the torch to ensure continuity.
Together, Steene and Zhang have shaped a philosophy that stands apart from the growth-at-all-costs mentality of Silicon Valley. They avoid forecasts and annual targets that could force hasty deal-making. They don’t chase growth for its own sake. They focus on businesses they understand, not grand predictions about the future. They prioritize safety over speed, resisting the temptation of high-risk bets. And above all, they think in decades, relying on the compounding power of careful capital allocation and seeing themselves as long-term stewards of shareholder value.
The Engine of Growth: Strategic Acquisitions
Teqnion’s growth story is, at its core, an acquisition story. The model is straightforward but powerful: find profitable, niche-focused industrial businesses, acquire them, and hold them indefinitely. Over time, this builds a diversified family of companies that grow together through the steady, compounding effect of disciplined capital allocation.
Where Teqnion stands out is in how it approaches acquisitions. Instead of forcing new subsidiaries into a rigid, one-size-fits-all playbook, the company works with sellers to shape a tailored path forward. That flexibility, and the trust it builds, has become a genuine competitive edge. It makes Teqnion an attractive buyer for high-quality businesses whose founders want an exit but don’t want to see their life’s work dismantled by a more traditional private equity play.
The parent company itself stays intentionally lean. Its role is to provide strategic and financial support, not to interfere in day-to-day operations. This hands-off model is deliberate: it helps preserve the entrepreneurial drive and specialized expertise that made these businesses successful in the first place. For many sellers, that’s exactly what makes Teqnion such an appealing long-term home.
At the heart of the model are three guiding pillars: stability, profitability, and shareholder value. Financial discipline is central: net debt to EBITDA is kept under 2.5x, EBITA margins are targeted above 9%, and the goal is to double earnings per share every five years. That last target translates into a compound annual growth rate of around 14.4%. And tellingly, for each of the past five years, Teqnion has managed to deliver on all three objectives.
Five seems to be Teqnion’s magic number. The company not only aims to double earnings per share every five years, but it also structures acquisitions so that free cash flow from the acquired business covers the purchase price within that same timeframe. In practice, that means buying companies at around 5x EBITDA. Layer in organic growth on top of that, and the math works out to support Teqnion’s long-term compounding target.
The focus, however, isn’t just on price, it’s on quality. Teqnion looks for businesses with solid financial track records and products or services that will remain relevant for decades. The goal is to hold them “forever,” creating a compounding machine that reinvests cash flow into more acquisitions.
The resulting portfolio is broad and eclectic. Subsidiaries range from Air Target, a defense technology business, to Cellab Nordia, which supplies laboratory equipment, to Eloflex, a maker of foldable electric wheelchairs. Even more striking, some acquisitions are as low-tech as UK Lanyard Makers, a business with no moat and no competitive advantage, but with the one thing Teqnion values most: dependable cash flow.
This sheer variety is intentional. Diversification acts as a risk shield, ensuring the group’s performance isn’t overly tied to any single market or economic cycle. That approach is especially evident in Teqnion’s recent expansion into the UK. In May 2025, it acquired Norlin Polymers (not yet included in the graphic above), marking its seventh UK deal in under two years. Having originally focused on the Nordic region, the company has shown it can replicate its model abroad, opening up a much longer growth runway.
Ultimately, the investment case rests on Teqnion’s ability to keep finding and acquiring these kinds of businesses. Each successful deal adds to the revenue and profit base, creating a flywheel effect that drives earnings higher over time.
But here’s where the story gets more complicated. Teqnion is starting to look like a jack of all trades, master of none.
As we discussed back in the introductory podcast, serial acquirers typically roll up businesses within a single industry, consolidating market share and unlocking efficiencies through scale. Programmatic acquirers, on the other hand, take a different path: they buy businesses across multiple industries, keep them decentralized, and don’t try to integrate them. Teqnion clearly falls into this second camp.
That’s not inherently a problem. Some of the world’s best compounders operate this way.
The difference is that the most successful programmatic acquirers still carve out a specialization, even if they’re industry agnostic. Constellation Software dominates in vertical market software. Judges Scientific zeroes in on scientific instruments. Danaher has built an empire in life sciences and diagnostics. Halma thrives in safety, health, and environmental technologies. This focus gives them an edge: they develop deep expertise, maintain operational discipline, and consistently deliver superior returns.
Teqnion, by contrast, lacks that same clarity of focus. Its portfolio looks more like a patchwork of unrelated businesses than a carefully constructed platform. That absence of specialization could prove to be its Achilles heel. Without a defined area of expertise, acquisitions risk becoming scattershot, leading to what Peter Lynch famously called “diworsification”, when too much diversification into unrelated areas ends up misallocating capital and destroying value.
So what do the numbers tell us?
A Look Under the Hood: Financial Performance
Over the past five years, Teqnion has posted impressive growth. Revenues climbed from around SEK 635 million to SEK 1.67 billion, while earnings rose from SEK 45 million to SEK 115 million. That translates to an average annual earnings growth rate of about 22.5%, a clear sign that the acquisition strategy has delivered.
The company has also shown it can grow both organically and through deals. Between 2021 and 2022, revenue surged 44%, with nearly half of that driven by organic growth. Returns on capital have remained high, averaging 18.5% ROCE over five years, while free cash flow margins of 9.5% highlight Teqnion’s credentials as a credible compounder.
But the share price tells a different story. After peaking at SEK 274 in February 2024, the stock has since fallen by almost half, to SEK 142 in August 2025. That drop reflects both fundamental challenges and a broader valuation reset.
The top line has continued to expand, largely on the back of acquisitions, but cash flow tells a more worrying story. Free cash flow margins have deteriorated sharply, undermining the very foundation of Teqnion’s acquisition-driven model.
As the chart below shows, conversion of earnings into cash has weakened, raising legitimate concerns about how future acquisitions will be financed.
Why is this happening?
Part of the problem comes from housing-related subsidiaries like Grimstorps, Hem1, and K-Fab, which account for about 8% of the portfolio. Rising interest rates in Sweden (from 0% in 2022 to 4% in 2024) pushed up mortgage costs, dampening housing demand and dragging down these businesses. On the face of it, this looks like a cyclical macro-economic issue.
Yet, the latest results paint a mixed picture. Net sales for the group as a whole rose a healthy 19%, yet organic growth slipped 3%, meaning acquisitions are carrying all the weight while existing businesses are acting as a drag.
On the Q4 2024 earnings call, management acknowledged that nearly a third of its subsidiaries underperformed during the year and spent much of the call discussing how to correct course. That admission ties back to the earlier reference to “diworsification” and the danger of lacking specialist focus when making acquisitions.
In response, Teqnion’s central management has become more hands-on with some struggling subsidiaries, a notable shift from its usual decentralized model. Even if temporary, this deviation suggests that a few past acquisitions may not have been the right fit.
To his credit, Steene hasn’t sugarcoated the situation. In the Q2 2025 interim report, he admitted the “turnaround [is] painfully slow” and that the company hadn’t been “sharp enough” in adjusting to global uncertainty. This candor is refreshing and should build confidence that management isn’t in denial. But by framing most of the problems as external (macro headwinds, interest rates, housing cycles) there’s a risk of overlooking internal, systemic issues in the acquisition process.
Management has been clear that persistent underperformers won’t be tolerated. If a subsidiary continues to drag without signs of recovery, it will be downsized, divested, or even shut down to stop capital leakage. So far, none of these “nuclear options” have been deployed, but they remain on the table.
Another concern is the planned acceleration of acquisitions over the next 12 to 18 months. With free cash flow under pressure, how will this be funded? More particularly, if there are systemic issues in the growth engine, is it wise to for management to put its foot down hard on the gas before resolving those problems?
The combination of these factors play on investor psychology, with sentiment becoming negative. Bear in mind that the Swedish stock market experienced a significant decline in 2022 (-29%), driven by rising interest rates and inflation, which likely carried over into a broader risk-off mood during 2023-2024.
However, the significant drop in the market capitalization of Teqnion from the 2023 peak suggests that the stock was likely overvalued. Strong five-year topline annualized growth of 46% may have fueled a degree of investor over-exuberance, with valuations running well ahead of fundamentals. The correction we’re seeing now looks more like a rebalancing of expectations as growth slows and challenges come into focus.
That said, the story isn’t all negative. Steene has highlighted significant room for improvement in areas like operational efficiency, purchasing, and sales within the existing subsidiaries. If management can execute on these improvements, it could reignite organic growth. And if that happens, it would serve as a powerful catalyst for the stock.
The Teqnion Red Flag
I’ve spent considerable time analyzing Teqnion, and a number of issues sit uncomfortably in my mind - enough to keep me from investing at this time. I’ve raised these concerns directly with Steene and Zhang, yet both refuse to engage substantively.
That behaviour tells me everything I need to know. I’ve almost certainly hit on some inconvenient truths that management may be dealing with, but does not wish to speak about at this time. When I raised these concerns with management and got stonewalled, that was a red flag for me.
Let me walk you through what’s bothering me.
The “Safe Harbour” That Doesn’t Always Make Sense
Teqnion’s stated mission is noble: provide founders with a “safe harbour” where their life’s work can be preserved. Beautiful idea. But when you look at some of their actual acquisitions, the narrative starts falling apart.
Take UK Lanyard Makers, for example.
It was founded by Kevin Kingham, who spent 25 years in the pet industry before setting up a catering and events business for weddings. Later in his career, he and his wife - who had worked in office management, personal training and health centre management - started this lanyard business. Their pitch? Most lanyards are made in China, but they wanted to offer a lower carbon footprint option by manufacturing them in the UK.
Okay, stop right there.
This cannot honestly be described as their “life’s work.” It sounds like a venture wrapped in environmental ideology. Where’s the competitive advantage? Where’s the passion? And if they were so committed to this environmental mission, why cash out and sell to Teqnion less than ten years after founding it?
This raises serious questions about how Teqnion evaluates acquisition targets. Are they buying businesses that founders genuinely care about preserving? Or are they just buying whatever’s available at the right price?
The Cyclical Business Problem
Daniel Zhang has said in interviews that he likes cyclical businesses because you can acquire them cheaply during downturns and as an industry-agnostic holding company, Teqnion is naturally hedged through diversification.
In theory, this works. In practice? It’s questionable.
I’ve been struck by how sharply this differs from other successful serial acquirers. Constellation Software has thrived by focusing relentlessly on mission-critical, non-cyclical businesses - software that customers can’t live without, recession or not.
And here’s the thing: the commercial issues currently facing the Teqnion group flow, at least in part, from being too heavily invested in cyclical businesses.
Perhaps management should revisit this element of the business model. Because “we’re diversified, so cycles don’t matter” only works until it doesn’t.
The Succession Planning Problem
Johan Steene had a candid discussion on the ‘In Practice’ podcast where he explained Teqnion’s approach: they most often acquire businesses where the CEO is standing down, maybe retiring. They structure the deal with an earn-out, and during that transition period, they search for a replacement CEO.
This should set off alarm bells.
Ideally, strong succession planning should be visible and in place before an acquisition, not something you solve afterward. The companies with the deepest cultural resilience are almost always those that promote from within - people who’ve served in the business for years, understand the culture, know the customers, and can step into leadership seamlessly.
Of course, these insiders rarely have the capital to buy out the founder. That’s where Teqnion should add value (exactly how Berkshire Hathaway and Constellation Software operate). You provide the capital, the insider provides the continuity and everyone wins. The business continues, the culture is preserved, there’s minimal risk, and Teqnion gets an ownership stake in a low-risk, cash-generating, durable business.
Doing it any other way is rolling the dice with each acquisition. You’re parachuting in an external CEO who doesn’t know the business, doesn’t know the culture, and may or may not work out.
Why take that risk when you don’t have to?
The CEO Coach Question
Here’s another one that bothers me: Teqnion employs CEO coaches to help the management of acquired companies.
Wait. What?
If you’re acquiring a company where management needs to be coached, doesn’t that suggest you acquired the wrong company?
Decentralization is all about buying well-managed businesses and being hands-off. That’s the entire point. Scaling a holding company with low capital intensity requires decentralization. You can’t have a small head office babysitting dozens of portfolio companies. You need businesses that run themselves.
Once again, Berkshire Hathaway and Constellation Software serve as perfect exemplars of best practice. They buy businesses with strong management already in place, then leave them alone. If the management needs coaching, they probably shouldn’t have bought the business.
Is Teqnion A Good Investment?
Look, I want to like Teqnion. The thesis is compelling on paper. But when you dig into the details: the actual acquisitions, the approach to cyclicality, the succession planning gaps, the need for CEO coaching -it starts to feel like a company that’s strayed from the playbook that makes serial acquirers successful.
So, is Teqnion attractive at today’s valuation? Right now, it’s hard to give a definitive answer - the jury is out.
What we can say is that Teqnion remains a compelling, though not risk-free, long-term opportunity built on the proven model of programmatic acquisitions. Its small size, broad portfolio, geographic reach and focus on niche markets all point to meaningful growth potential. But to fully unlock that potential, the company still needs to sharpen its approach to acquisitions and operational execution.
A key strength lies in its leadership. Johan Steene isn’t just any CEO - he’s personally and philosophically invested in Teqnion’s success. His relentless drive, paired with a financial commitment that ties his fate to the company’s, gives Teqnion a unique and difficult-to-replicate advantage. If his ultra-marathon achievements are anything to go by, he certainly has the grit and determination to overcome any challenge that may come his way and he has shown himself to be a winner. For outside shareholders, that’s a rare asset.
Recent results have shown some softness - slower organic growth and operational bumps - but at least some of this is due to tough macro conditions and the inevitable growing pains of a rapidly expanding organization. Any structural flaws are not insurmountable and, importantly, management has been transparent about these issues, which should give investors some confidence.
For those willing to stomach short-term volatility, the long-term picture looks promising. If organic growth can re-accelerate alongside a steady pipeline of acquisitions, Teqnion has all the ingredients to become a powerful compounding machine. The real challenge is tuning out the quarterly noise and focusing on the durability of its underlying business model.
Good article, have a look at their latest earning from Saturday, it seems like their turnaround is finally starting to show results...