Topicus, Teqnion, Tasmea | A Business Overview
Three To Thrive
At The Dutch Investors, we’re particularly fond of serial acquirers. Our analysts collectively own three such companies. Their ability to redeploy capital at high IRRs is a key trait of long-term compounders and multibaggers.
In this article, we introduce three compelling serial acquirers (we don’t own all of them). Each comes with its own distinct strengths and trade-offs.
Topicus
Topicus is often referred to as a mini Constellation Software. Theoretically, this is true: Constellation has replicated its decentralized vertical market software (VMS) playbook through Topicus in Europe. And yes, Topicus is still mini: while Constellation’s market cap is $56 billion, Topicus’ market cap is just $6 billion (USD). Furthermore, Constellation remains a large shareholder, owning roughly 30% of Topicus.
Part of Topicus is Total Specific Solutions (TSS). This is Topicus' acquisition machine, acquiring roughly 10-20 businesses a year. Topicus currently consists of a total of roughly 150 subsidiaries.
The key differences between Topicus and Constellation lie in their maturity and approach to organic growth. Constellation’s scale makes it increasingly difficult to find VMS businesses that meet its IRR target (20% ROIC), while this remains easier at Topicus’ size. In addition, Topicus places greater emphasis on organic growth, resulting in a modest advantage of a few percentage points.
One thing we find particularly compelling about Topicus is how management is incentivized. The subsidiary CEOs within Topicus compensation are structured to align their interests with long-term performance, often based on ROIC and revenue growth.
Directors at Topicus receive annual incentive compensation in addition to their base salary. The metrics here are, again, net revenue growth and ROIC. But then, executives have to invest 75% of annual incentive compensation in Topicus shares. Besides, the minimum holding period for these shares is four years. Well… That’s how you align interests between management and shareholders!
From a valuation perspective, it’s best to calculate the intrinsic value by dividing FCFA2S by the common shares outstanding. For fiscal year 2025, this number was €2.63 per share. The current share price is €63 (102 CAD), giving them a price-to-free cash flow of 24x. However, investors should be aware of the fact that Topicus acquired a 15% stake in Asseco Poland (worth around €680 million) that’s not present in the FCF above. We view this as a nice ‘bonus’ on top of the already attractive valuation of Topicus.
Teqnion
Teqnion is a Swedish serial acquirer, owning subsidiaries both in Sweden, as well as in the U.K. Instead of acquiring VMS businesses, Teqnion acquires industrial niche businesses. Think of Averlair Limited (a designer and manufacturer of rotary screw air compressors and systems) and Midlands Fasteners (designing and manufacturing special fasteners and machine parts).
Teqnion is run by founder and CEO Johan Steene and Deputy CEO Daniel Zhang. While their communication can sometimes appear informal (for example, simply designed reports and Teams-hosted earnings calls), that is also part of what makes the company distinctive. They seem far less focused on presentation and far more on execution and value creation. We still remember a dinner with Zhang, where he said, “The value of Teqnion is up to investors to determine.”
Teqnion aims to deliver shareholder value by doubling its EPS every five years, implying a 15% CAGR. As you might know, we believe that over time, share prices tend to follow EPS growth. This is also a core conviction of Teqnion’s management, and historically there has been a strong correlation between its share price performance and EPS development.
Teqnion’s long-term cash bonus program that runs through 2030 is based on the market cap of Teqnion: Steene and Zhang earn a 2% bonus on market cap gains above 6 billion SEK (current market cap: 2.67 billion SEK) by April 2030, capped at SEK 40 million each. That’s in line with the shareholders goal of increasing the market cap of Teqnion.
Management has made some missteps and has been transparent in acknowledging them, such as the Reward Catering situation, where the investment was largely written down through an impairment test. Both parties are currently involved in ongoing legal proceedings, which adds to the investment risk. Execution also remains highly dependent on management, with limited visibility on succession planning beyond Steene and Zhang.
We view Teqnion as an attractive long-term investment. Despite trading at ~27x earnings, we believe it has a long runway for continued growth. Recent acquisitions appear higher quality, and we regard Steene and Zhang as high-integrity, lifelong learners, a rare combination in management.
Tasmea
Bouke, one of our analysts, is still in the process of analyzing Tasmea but sees many green flags. If we’d only give you the following information, could you get any more excited?
$650 million (USD) market cap (possibly a long runway);
Acquires companies at very low multiples (3-5x EV/EBIT);
Management owns 60%(!) of the company;
Since FY 2022, EBIT has grown at a CAGR of 30%;
Trading at only 11 times forward operating earnings.
Well… there’s a lot to like about Tasmea, but there are some risks as well. While Topicus’ and Teqnion’s subsidiaries appear to have strong competitive advantages, we doubt that’s the case at all of Tasmea’s businesses.
For your information, Tasmea delivers services to industrial plants in Australia. Think of electrical maintenance and shutdown services, as well as construction and on-site installation of piping systems.
A great statistic is that of the 25 subsidiaries Tasmea owns, 14 CEOs are still leading the company that founded the company. That’s no coincidence. Tasmea targets owner-operators who wish to continue growing their business with the support of a larger platform, not founders looking for an exit.
Where Teqnion is currently changing many CEOs of its subsidiaries, the opposite is true for Tasmea. It’s not that Teqnion likes to change CEOs, but it’s a necessity given the weak performance they deliver. The opposite is true for Tasmea.
As the picture down below implies, Tasmea acquired roughly four businesses a year.
Tasmea acquires these businesses often at 3-5 times earnings. That’s… impressive. Doing some simple math, Tasmea got an IRR of 20-33% without any operational improvements, which is super attractive.
Tasmea aims to grow 15% organically per year, partly because they grow alongside their customers, but also by gaining market share and by covering wage inflation.
A detailed, ~30-page analysis is set to be released this Friday (May 1) for our TDI Members. Keen to learn more about businesses and join a community of like-minded investors? Join The Dutch Investors for a 50% discount today!
It’s an honor if you’ve read this far. We’re excited about the years ahead, both as investors and as we continue serving our TDI Members.
Best,
Bouke, Siem & Mathijs
The Dutch Investors
Tasmea is a special one! Its my biggest position. Their moat is much stronger as one might think, even more after the Workpac acquisition. Curious for the analysis