# Open Questions and Numbers to Reconcile ## What this map does not settle Everything here comes from a **single source with a commercial interest** — REQ Capital's *A Deep Dive into Shareholder Value Creation by Acquisition-Driven Compounders*, July 2025, 312 pages. REQ runs two long-only UCITS funds in exactly this strategy. The deck is excellent and heavily evidenced; it is also a marketing document. Treat the framework as high-signal and the performance comparisons as needing independent replication. ## Contested and unverified figures | Item | What the deck says | Problem | What moves if it changes | | --- | --- | --- | --- | | Assa Abloy net debt | "net debt from SEK 0.6bn to SEK 15.5bn in **2021**", in a sentence about 1995–2001 leverage | Almost certainly a typo for **2001** — the same sentence gives ND/EBITDA rising 1.5×→3.9× "from 1995 to 2001" (p.169) | Nothing structural; fix before quoting | | Assa Abloy multiple compression | "From the peak in **2020**, valuation multiples compressed from 57× to 8× by **2018**" (p.168) | Internally inconsistent — the peak year must be ~2000 | Nothing structural; the *shape* of the story is well supported elsewhere | | Nordic deal count by year | Totals read as 2005: 62 … 2019: 294 · 2020: 329 · **2021: 586** · 2022: 509 · 2023: 292 (p.199) | Read off an OCR'd table; the year alignment is inferred, not labelled per-column | The cycle argument — a 2021 peak and ~50% fall by 2023 is a strong claim about the M&A cycle | | Index outperformance | Nordic ADCs 17.9% CAGR over 20y vs OMX 10.9% (p.28) | Sample is **REQ-identified** companies **listed for the full period**. That is survivorship on two axes | The headline case for the whole strategy. Needs an independent, pre-registered universe to be load-bearing | | Heico return | "21% annual returns, amounting to a total return of 67,900%" since 1990 (p.75) | 21% over ~34 years is ~700×, not 679× — close enough, but the deck's own opening table says **1,100× at 22%** (p.5) | Nothing; note the two figures come from different as-of dates | ## Genuine open questions **1. Does the model work outside a high-trust, high-disclosure society?** REQ's own explanation for Sweden's dominance leans on public annual reports for all companies, high interpersonal trust, and a dense population of family SMEs (p.79–80). Constellation Software, Heico and Judges Scientific suggest it travels. But the deck never tests whether the *sourcing* advantage — being the preferred buyer among thousands of anonymous family owners — replicates where corporate financials are private and trust is lower. **2. What happens at the succession of a forever-CEO?** REQ flags succession risk and then classifies its holdings into three roadmaps — but offers no data on outcomes. Mark Leonard at Constellation is the live case with the most at stake. **3. Does the "Company X" finding generalise?** Sales up post-acquisition, EBIT flat, group margin held up only by buying above-margin businesses each year (p.298–302). If that pattern is common rather than specific to one company, then a meaningful part of the sector's reported "organic uplift" is acquisition mix. This is the most damaging finding in the deck and REQ published it about an *anonymised* company. Worth trying to replicate on a named one. **4. Does the entry-multiple advantage survive the strategy becoming famous?** Sweden has IPO'd a wave of acquirers; Nordic deal counts more than quintupled from 2009 to 2021. Private-market multiples are the input the whole return depends on. The deck argues the pool is effectively infinite; it does not show that the *price* of the pool is stable. **5. Where does this fit against your existing book?** Your framework in [[Quality Compounders]] favours structural monopolies with pricing power. This model favours a **portfolio of small moats plus a redeployment engine**. Both compound. They fail differently — a tollbooth fails when the moat erodes; a compounder fails when the reinvestment rate or the discipline does. Sizing them the same way is probably a mistake, and the deck offers no help on that. ## Related - [[Acquisition-Driven Compounders MOC]] - [[The Compounder Screener]] - [[Quality Compounders]] - [[Red Flags in Serial Acquirers]]