Konsolidering pågår med Cedric Frostdahl

[Music] How does the consolidation of the industry affect short and long term? Why do we see so many purchases in the supply and supply industry? And how does it affect the practice? That and much more we are going to talk about in today's episode of Move On Economy Pod. This is going to be really exciting. Welcome! [Music] Today we have Cedric Frostal from RantaLine to talk about consolidating, buying and other fun. Welcome Cedric! Thank you, it's been great to be here. Yes you Cedric, you are head of M&A for Sweden. Or rather, for Sweden on RantaLine. That's right, isn't it? That's right. And we may also talk about that M&A stands for Murders and Acquisitions. It can be good for those who listen. And here in Sweden you are among other things ready for consulting. But you have been active in the industry earlier, haven't you? Yes, that's right. I have worked for about eight years in the retail business industry. Six years as the office manager. And in the operational role, I have lived in this office every day for a number of years. But now, after two years, I have been working with the company. I work with them every day. That's your daily routine. Yes, how will that be? You have gone over to that side now? Well, there were a lot of things to do. I used to work with the company earlier, over my usual role, so to speak. And I have always thought that this is fun. Then I was very locked up in this opportunity to work in another country. I have worked all my life regionally in Finland, in the eastern bottom. So it was a thing that locked me a lot. And then, after being the boss for 20 years, I felt that I needed it. I needed it for change. It's a bit funny. It's a bit of a novelty. You don't want to stop. No, you don't want to stop. But when you look from your office window, you are in the eastern bottom. Or do you live here in Sweden now? I live in Jakobstad in the eastern bottom, in Kajland. Do you know where it is, André? Yes, I have been there. I have been at the swimming competition there. So of course, you have been everywhere at the swimming competition. I have been at the pool in the western bottom. Yes, on the other side. Yes, exactly. So we had an exchange there. So I have been in Jakobstad and I have been at the swimming competition there. Yes, that's true. When you come from the northern parts of Sweden, you have a better view on the eastern bottom. The eastern bottom is the most Swedish-speaking part of the Netherlands. My home language is Swedish. But I have also learned Finnish with the years. Yes, that's how you should see it. That's what you have learned this year. Yes, but it's fun to hear you with challenges, you have to say. And yes, let's jump straight into what we started with, to say briefly. What do you think this consolidation wave is about? What do you think, Erik? Well, that's a relatively big question. Yes, exactly. We are starting to talk a little bit about it. It is probably about a lot of different things. But in the basic bottom, it is based on that the industry is used for different changes. That affects the actors in the industry, and in order to mention some changes, this increased regulation is a change that affects us, who are active in the industry, very strongly. It becomes more difficult, more difficult to drive around. And so that's a big thing. Then we have also long been affected by the digitalisation of this daily force. In addition to that, there is also the automation that affects the actors in the industry. And then the third thing is that this is to find the right people, to find the talents and keep them. This is also a big challenge in the industry. And this makes some of the owners feel that maybe they need help to drive on. It becomes difficult to drive yourself, and then it can feel like a locking opportunity to go up in something bigger. So that is the underlying driving forces. Then there is the SPLITRAD branch. There are close to 20,000 or around 20,000 offices in Sweden. Some are also older, it becomes a generation change. So there are many things, many factors that drive this. Do you see the same thing in other countries? At least in the whole of the north, where we have operated abroad, there are the same trends in all countries. We also have to look at other countries in Europe, and that is basically the same everywhere. And the trends that Andreea is talking about today, which are probably the most read by us three here in the studio on this Future Ready Accountant report. It is exactly these trends that we see there. It is a high tax of digitalisation, you have a challenge to find the right talent. The right living, it is difficult to keep up with what we have heard earlier from others. You can't find the right people, you can't shoot all the parts. All of them can't be experts on ESG and penning, you have to help. And then it is difficult as an individual company, to be this big. Even if you are a little more, it is a big challenge. In the foundation, those who own and have founded a rescue office, they drive this, or drive customer work, to help customers, they are experts, can do their work in that way. But everything else, they are not always so particularly interested in it, that's why they have started a rescue. No, that's what the company has started, maybe because you are an expert on these. You are an expert on economy, and you like to help customers. After all, there are others who are not the ones you care about. We also saw in the report that these things are an increased experience that is difficult for them. It is not fun to get this all the time, when you want to be close to the customer and do this. But is it good? Yes, and I think that this regular experience has changed over time, so there is nothing. But of course there has been a lot of new things now, maybe it is digitalisation and so on. Consolidation has always been found as a part of the brand. Yes, it has been found for many, many years, and the concept of this has also changed over time. And it has also been a top article. But now there is a very big activity, regarding the promotion. What do you think is the start-up for this consolidation and these things? What do you think was the beginning of this? Yes, it is very difficult, because it has been found for a longer time. But then, of course, these driving factors have become more and more clear. So many different actors have also woken up for this opportunity and their opportunity to work with consolidation. There has been a lot of work with a company called Bayenbils, where you buy and build something bigger. And they have noticed that there are things and driving forces for consolidation. And then new actors wake up and suddenly it becomes a completely different approach to consolidation. When we were preparing for this, I thought that when a company bought Ludvig or LRF, it was something quite new when they bought such a big company. And it felt like there was something going on. Then it took a couple of years before the next thing. But now it is not just small offices that have been bought, it is also the big companies that replace owners at least. Exactly. And now both revision and revisionism and even on the program side, you start to notice that this is happening. Yes, we saw all the news when there is a bid on both Wisma, which is also a fund. And then there is now Fort Knox in Sweden, which got a purchase bid here. Let's see where it lands in. I would say that it is with the brand to see the brand, that it is such a big interest to be a brand. Yes, but it is valuable and a good contribution for us in the brand and the whole brand. So you can really see it. I think that we are already going to throw in the question we got in our interview from Björn Elfgren. He had a question for you, Cedric. And it's just a matter of, for some small, medium-sized offices, but a little bit with risks and possibilities. We can listen to it, then it will come here. Yes, but Cedric, I don't know you, but it would have been nice to meet you, so I think Rantaline does a lot of fun things. Then they are also owned by a PE team, we have a look at that. I think that this is a very big consolidation and small, medium-sized offices have been bought up before. There has been a lot of already wisdom. Now it is also on the revision side, where we see larger offices and buttons from the small part to PE-owned structures. And I think on this, is it really just money that controls, or is there another reason for this purchase that happens? Is it really the best for the customers and employees you do? And the complete question is also what do you see for risks and possibilities with the development? Yes, thanks for the question, Björn. No, I don't think it's just money that controls anything, of course, money is important for everyone. But it's very rarely money is the only thing that controls and leads to a decline in sales of its company. The background is that the PE company has noticed that there is a fundamental reason for building larger companies in the repair industry. And therefore they are interested in buying many offices. Some of the offices sell their own money, but there is also a underlying need and interest in becoming a part of a larger company. You may need help with something related to the operation and the everyday life in the office. When it comes to risks, you have to always think about the perspective of who buys the most, because those who buy a lot of offices take a big economic risk. They invest money and buy more offices. So they have a risk, and it is always a goal to make sure that it is good, so that this risk also gives a decline and that you do not spend money on your own. Then there are these co-workers and customers. It is also a key question, there can also be a risk for co-workers and customers if a office does not become sold, although it may live to be sold. And in some cases it can also be a risk to be bought. Because the most goes well, but it always goes well. So that's a key question in many ways. But I think it's good for the industry that there is a consolidation. And there are many companies in the industry, I think it will be hard to find companies in different big companies. It is very far from that we only have a handful of actors on the market. So I think we will also, after four or five years, find both big and small offices. And that means that there is an alternative for both customers and co-workers, even in the future. Thank you for the answer, that was interesting. But how does it actually go? Can we go through this practice? What do you need ... Yes, we can take many questions, but what do you start somewhere? Well, I often start with a human meeting. A contact between, if I take my perspective, a contact between me and a office manager, a office worker, who maybe wants to go up in a larger heli. So it starts with a human meeting, in principle. Is it both ways? Are you the one who goes to someone and says "hej hej" or are they coming to you and say ... It is both. There is both so that we are active, of course, and take contact. But then there is also the office manager who takes contact. It can be someone more active in some way, so there are different ways that we meet and say. But it starts from a meeting and that one wants an interest. And then you discuss, you sometimes notice that there is something to build on. Sometimes it may not be possible to go deeper into the discussion there. But if there is an interest to go on, then you start to discuss a little more in detail how the collaboration would look like. In a way, you engage in transaction details. Yes, exactly. But before we go into that, what criteria do you look at for a potential purchase, or what word should we use? What are some of those? What do you look at and then decide if I will say that I am potentially interested in selling this? In principle, all kinds of businesses can be interesting. But it is clear that it is good for us, or we like it if the owner, the seller, wants to stay and work with us. We think that is a big advantage, because we have noticed that it minuses the risk of being overwhelmed. It is often a more stable and calm journey if the sellers and the owners of the store stay. So we think that is important. Yes, it is good that we have a well balanced customer portfolio. We have also built the development of the office in a good way, so that we do not get into trouble in several years. We have worked with modern tools and digitalization. We still have a lot of compliance questions, like COI, CEA, ML and so on. Is it an advantage that they have started this digitalization journey, where they are now, to work with modern tools? Or is it something that they implement? In that sense, they have a good customer portfolio, how would you evaluate them? Now let's say that it is quite important that you have modern tools. We have done something for the world where not all customers are digitalized, so there may be many customers. But it will be very difficult if the office is a legacy program, and you have to start changing the rescue program, for example. Or over a part of the other changes, so it is a big disadvantage. If you want to prepare yourself to get involved in a collaboration with you, you should not give up on the idea that you should get started. No, I think so. It is a good formula. Sometimes you should not give up on the idea that you should work on your own conditions, work to develop the office, so that it can be done on its own. And you also say that you have to wear your pants. Yes, it sounds a bit negative to wear pants, but that is the way it is. Sometimes the office is not dependent on the owner, the seller. It is better if you work to make yourself unnecessarily, to try to keep yourself unworthy, of course. That makes the office more valuable, and that you do not end up with development work for five years before you think about it. No, but there is something in it, as you said, André, that you continue to invest in, and you said that you want to make sure that the owner is left or the boss is left. Which makes it a more stable transition, if I have understood correctly. Yes, exactly. So if you want to get out of the room, it is not a quick distribution, and then I go to the Swedish solar system. But it is a bit more of a long-term transition, does it sound like that? Yes, and that is why it is good to start selling work, or what you should call it, good time, that you do not want to start looking for someone who wants to take over the office. Then you do not get the full value out of your office. No, but it is a good advice, that you think about your situation a bit before you start planning. You do not wake up and say, "Now this is shit." No, now this is shit when I press these buttons. It works, but it does not get good. I do not recommend it. No, you recommend training. I think it is a fairly high-quality recommendation, but it comes from you, that it is possible to do better. Can you give an example where you have not maybe mentioned offices, but where you have been really successful, where you feel that this was really good, what was it that played into? We have done 100+ reviews over the last 6-20 years, and of course we have also found out why it goes well, and why it may not go well. And one important thing, actually communication, is that you wonder about the process, that you have a very clear understanding of what is happening, where you are on the road, that you have the same opinion about how it continues, after reviews, that is really important. And then, outside of that communication with employees, especially with customers, after the interview. So that they also know where you are on the road, and that they feel safe, and understand what happens and why and what is the reason. Exactly, as always. In general, in all the companies, the communication. The more we have in this pod, and talk about it, the more it becomes that it is not a review, but a company, a company like the others. But they agree with the review, or the review, but I think that the journey, it is in the middle of it now. Especially when you have driven a review, and as you say, you have been an owner, and you love helping customers with tax and economy. But then it becomes something else. And I think that it is that journey that many offices have to come in, to drive this as a real company, or really, to use it properly. Maybe it was not so nice. But I understand what you mean. You have had a passion for a review, and if you need to start thinking more about how I actually drive the company, as you said. And what is the management of the communication. It is digitalization when we are going to invest. I have a plan, I might want to go to the pension. Who is going to take over? There is a generation shift, when there may not be any other external part, the rental line, or something like that. Now there seems to be a lot of money in this, that stops in this industry. It is still important to highlight things from different angles here, as you said, and it can go really well. If you shoot leadership, communication and all this. But what is it that can go less well? Is it that there will be too much change in the short term, or what do you see there that can go wrong? If there is too much in the short term, and apart from that there is bad communication, then there can be too much for me, the workers, that they do not work at all. But for the most part it goes well, there will always be some trouble on the road. But that is also the case, even if you do not know how to make sure that you are in a security office, then there is always no more wind and a dance on the road. So it is necessary that there are changes, and it does not always go as you have thought. No, this industry may not be a change in the idea, it is very traditional in the big part. But there are always changes. There will be a new law firm, there will always be something new, something in support. We must take someone who will come in in the last second, or have well prepared, or whatever. So they are prepared many times. Yes, you can think of it and at the same time it is said that it is still a bit conservative in some parts. But you also mentioned this with the rule of law. I think it is a bit interesting, and we also saw that in our report. It is said that in Sweden, 66% of the office that answered this survey, it is the biggest challenge. That there were so many changes in the rules. Exactly, exactly. What kind of meetings are there? Are there more in Sweden? Yes, it is all countries. I was here the other day at a meeting where there were people from Finland, Sweden and Denmark. There was a lot of talk about compliance and rules. So now you can draw the conclusion that the same challenges everywhere, at least in other Nordic countries. Then the surveillance authorities in Sweden have had a rather active word of concern. Your words and concerns. There is the chill of how this attack on the authority. But the challenge is the same in the other Nordic countries. What else can you help with? How do you say that? That can be a challenge for a smaller office. What is it that gets better when you come in and become smarter? We have people who work with it, of course, in our organization. We have chosen a system palette that makes it easier to handle these questions. So we can help the offices that come along, so to speak. And it is a thing that, when I talk to offices, this is very often the case. And a driving factor is that you want to work with customers, employees, be experts, but you want to help them with different things. Compliance is one of these big things. It is big. Yes, it is a challenge. It has been heard from our customers all the time. Although they are super good at following rules, it may also be a challenge when there are so many new ones. You said that the system palette should change. Do you go in and get rid of all of them and say that you can use these programs or get the offices to stay with them? We have the integration, so it focuses on the administrative, not on the self-production programs, but on the administrative programs. So there we are doing certain changes, so it is an individual plan that is being done. But for self-administration, we want to have a unique palette in Sweden. You also say that some people go in and replace all the production programs with their own tools that they have created. But it is different. We have a program that is independent, a strategy that we do not develop our own programs and we do not want to link us with a single program. We want to be able to use more, for example, self-administration programs, as well as other programs. So let's think. Yes, it is time for three quick answers. Now I would like to have short answers here. What is your profession or profession? Fast, exit or long-term investment? I think that the long-term investment is the right answer to the alternative. Swede or sauna? Now it is difficult. Can you tell if you can get home or not? I am from Finland, so I have to choose sauna. What is wrong with Swedish girls? Swedish girls are nice. I am not a big... I don't know what you are saying, but I don't want to talk about bullies. I like coffee, but I don't like bullies. When I have Swedish girls, I think that both are dead. Yes, that is true. Had it been coffee or sauna, then it would have been coffee. Yes, that is good. We have talked a lot about AI in this podcast. It is not so strange. It is transforming the industry. Our program, which is coming to the market now, is naturally inspired by AI and other things. Cedric, how do you see the impact of AI? Maybe most of your experience from the industry now. How do you think AI will affect our industry? AI will affect the industry in many ways, I think. It has already started to affect the industry. The program will be thanks to AI and other functions. They will be better. They can perform part of these tasks. They will affect the amount of work, for safety and insurance, so that they will affect the everyday life in the offices. It has already done that. I have heard earlier that it was so difficult for a Swedish company in Finland to be so far ahead of the development of technology. Is that correct? You who have worked in both... I think it has driven it a little further. There are certain things in Finland that make it easier to drive digitalization and automation. Among other things, we have a well-informed factory standard that supports automation. The connection to the banks, the material that is delivered to the program, is more likely to be better. It is easier to automate things. It has done that you have lost a little more in Finland. But if you talk about offices, both in Finland and Sweden, you do your best and are ahead of the development you have. So that there is nothing that you notice very clearly when you visit offices. I have visited offices in both countries. Many of them. It looks quite the same now. But in Finland, something has improved. I think you can say that. At least you have a little right. You get a half point. AI is for different parts of AI. We are talking about AI in our program companies, but also more generative AI. How can AI help us all? I think so. You have started to say that, but you haven't seen all the possibilities yet. How can AI help us find information, ask questions we don't need to answer to the customer? So it can be both a possibility and a threat for the company. Can we use it and become better advice for our customers? Or in the worst case, someone else will pass by and take something. It is a little bit like that. We have said that we need to be on strike here, not just to take care of them. We have also learned today that you have to be on strike if you are going to sell your car or change your car. You should always be on strike. That's true. We have talked about different areas. AI will play a role. We have had different guests in the pod, which has been mentioned in different areas. But with large amount of information, it is something that you handle in this industry. Yes, I knew that. Control, analysis and other things are important data. It can also help in the complex questions of compliance. For example, the pension fee or the parts that you get help. It has also been seen as a tool. Exactly. The tools that are available today are more likely to be already on the customer side. But of course we hope that AI can help in the pension fee. We have also been aware that it is a social issue. That we get control over the pension fee. As we know, it continues. Then he can certainly take in the future help us with things that we should not even imagine. It can help us with today's situation. So it will be exciting to see how it will fall out. That is also an open mind that you need to have. In the next episode we have with us Daniel Larsson. He is the mayor of Ekobröttsmyndigheten here in Gothenburg. So you can ask your question to him. Yes, hi, hi. I have a question like this. I think how should we ensure that everyone in the industry works hard enough to fulfill the compliance requirements that we hear, say the opposite, the pension fee fee and so on. How should we get everyone to work hard so that we can reach the goal? Yes, that may be the summary of what we need to do, I think. It is exciting to hear what Ekobröttsmyndigheten thinks about this. Yes, really. Yes, it goes into a rush, thanks when you have fun here. We have this with three reasons now. So now we are going to have three reasons for those who are going to sell. Do you have it? Yes, I have it. For the first, I think, or I think that you should start a time, start preparing in good time. After it takes an hour, and it is important for many to sell a piece of paper. So you should start in good time. Second, make yourself more unnecessary and unbearable for the office. There are a lot of offices where everything is in place with the salesmen, the owners. And it is better if it is not in that way, because you have other people, you are not involved in other processes. So work towards being a little bit unnecessary. Third, stop developing the office. Continue as before, as if you would continue yourself. You should not start breaking up, buy on, develop, try, as good as you can, make your office even better, until an eventful sale. Very interesting advice. Especially here with OMBALY versus OMÖDI. What do you say about that, Andrea? You can try, do you have any facts related to it? Do you have any facts related to it? We will see. Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? Do you have any facts related to it? 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