9. PE-backed exits: Buyout exits stabilized
The exit activity declined slightly in 2023. 2021 stands out as an exceptional exit year in Nordic buyout. Compared to 2022, the number of buyout exits was reduced by 4 percent in 2023. This was exclusively due to a reduction in exits from Denmark. In the other Nordic countries, the number of exits remained stable or increased compared to 2022.
From the record-high level in 2021, the number of exits fell by 47 percent in 2022. This downward trend persisted into 2023, with 69 buyout exits completed.
Between 2017 and 2020, the number of buyout exits demonstrated a declining pattern. However, post-2020, the frequency of buyout exits appears to have stabilized, with 2021 being a notable outlier.
Significant exit transactions
Some of the most significant divestments during the year includes:
- In April 2023, M42 acquired Diaverum from Bridgepoint. The transaction valued the company at about USD 2-2.5 billion. Diaverum is Swedish company that provides life-enhancing renal care to patients with chronic kidney disease. (read more).
- In July, Nordic Capital Partners exited Macrobond, which is a leading, global provider of software and macroeconomic and financial data. The acquiror was Francisco Partners. The company was valued at EUR 700 million in the deal (read more).
- Valedo sold Joe & the Juice. The Danish juice and coffee bar concept was acquired by General Atlantic. The deal values the company at EUR 600 million.
- Insight Venture Management acquired Norvestor’s stake in Kabal (read more). Kabal is a fast-growing provider of logistics software to the global energy industry. Read more about the deal in chapter 10.
- AnaCap sold the Danish company Oona Health to Topdanmark. The company provides health services and insures, and was valued at over EUR 300 million in the transaction (read more).
- Danish company Ellab was sold by EQT to Novo Holdings. Ellab is a provider of validation and monitoring products and services for biotech and pharmaceutical processes (read more)
- IK Partners sold Swedish company Aspia to Vitruvian Partners in a secondary deal. Aspia is a leading technology-enabled accounting, payroll, tax and advisory services company. (read more).
- Nordic Capital sold Consilium Safety Group, a leading and fast-growing provider of innovative SafetyTech, to an affiliate of Antin Infrastructure Partners’ Flagship Fund V (read more)
Secondary exits top: For the second consecutive year in a row, secondary exits have emerged as the preferred approach, representing 45 percent of buyout exits in 2023.
Secondary sales superseding trade sales
Just as in the venture segment, secondary exits (sales to other fund managers) have overtaken trade sales as the favored exit strategy also in the buyout segment. In 2023, secondary exits comprised 43 percent of buyout exits, surpassing trade sales, which made up 29 percent of the deals. This shift aligns with the trend observed in recent years, where the proportion of secondary exits has been on the rise. Over the past five years, secondary exits averaged 30 percent, while trade sales previously dominated with an average share of 44 percent. A notable example of a successful secondary exit is the sale of Kabal by Norvestor to Insight Partners.
Combined, trade sales and secondary exits account for 74 percent of exits. Other exit strategies were share sales (17 percent of exits), other exit types (8 percent) and management buyouts (MBO) (2 percent).
Fredrik Gyllenhammar Raaum, Partner at Norvestor explains why there might have been some hesitance to launch sales processes:
“For many assets a certain buyer-seller valuation spread has been prevalent probably causing some hesitance to launch sales processes. In addition, availability of attractive debt financing likely did have some adverse impact on volumes particularly in the larger end of the market”, he says.
Norvestor made two strong exits in 2023, both representing secondary sales:
“2023 was a strong year for us in terms of exits with the completion of two successful divestments, selling Kabal to Insight Partners and Foxway to Nordic Capital. These are two high quality companies with clear and demonstrable growth potential which attracted a lot of interest and high valuations”, Gyllenhammar Raaum continues.
Read more about the exit of Kabal in chapter 10.
Number of ICT exits approaching historical levels
Apart from the ICT sector, all major sectors saw a decline in exits in 2023 compared to 2022. Industrial and consumer exits decreased by 4 percent and 28 percent respectively, while ICT exits experienced a threefold increase. This surge in ICT exits comes after a historically low number of exits in 2022, attributed to declining valuations. As the ICT sector rebounds towards historical norms and other key sectors witness a reduction in exits, the composition of exits in 2023 remained largely consistent with the five-year average.
These findings are also recognizable for experts in the industry. Lars Dybkjær, Managing Partner at Gro Capital, which focuses on B-to-B software, states that exiting high quality software companies are not problematic. He elaborates:
"Despite some short-term macro uncertainties, the megatrends of software investments continue. The demand for business-critical software with a well-defined value proposition remains strong. This means that high quality software companies are still high in demand, reflected in stable or even increased valuations. However, there may be a trend towards decreasing valuations for lower-quality software companies.“
In 2023, Denmark stood out as the sole country to witness a decline in the number of exits compared to 2022. The exits from Danish buyout companies decreased by 38 percent, a reduction significant enough to lower the overall number of exits across the Nordic countries.
Both Finland and Sweden saw a rise in the number of buyout exits, with increases of 18 percent and 12 percent respectively. However, the exit counts in both countries remained significantly below the five-year average. In Norway, buyout companies recorded 14 exits, mirroring the count from 2022. This figure aligns closely with the historical average once the outlier year of 2021 is excluded.