Why Sweden builds compounders - and why Finland does not?

Within the Nordic M&A landscape, a quietly evolving model has helped position Sweden as the region’s leading acquisition market. This model, commonly referred to as the compounder strategy, mirrors the approach used by some of the world’s most successful investors, most notably Warren Buffett through Berkshire Hathaway.

The question is not whether the model works, but why it has become deeply embedded in Sweden and globally, yet remains largely absent in Finland.

What is the compounder strategy?

At its core, the compounder strategy is built on a simple but highly effective principle: acquiring multiple businesses and operating them as autonomous entities within a larger group structure.

Acquired companies retain their brands, cultures, and management teams, and continue to develop independently without forced integration. Over time, this results in a diversified group generating stable and recurring cash flows rather than short-term transaction-driven returns.

Berkshire Hathaway remains the most well-known global example. In Sweden, however, the model is well established and widely practiced. Companies such as Indutrade, Lagercrantz, Addtech, Vitec Software, and Lifco have built their long-term success explicitly around compounder principles.

The data supports the model

Over the past decades, Swedish compounder companies have consistently outperformed the broader equity market in both share price development and total shareholder return. During the past five years, these companies have delivered an average annual return of 11.9%, compared with 7.5% for the relevant benchmark index.

This performance is not coincidental. It reflects the structural resilience of the model: compounders tend to generate stronger, more predictable cash flows than traditional integrated groups.

Growth has been achieved through the acquisition of hundreds of companies, without the need for consolidation, integration programs, or rebranding exercises. Each subsidiary operates independently while benefiting from group-level capital, governance structures, collaboration, and proven best practices.

For business owners, the model offers a compelling alternative: an exit into a long-term ownership structure where the company’s identity, culture, and operational autonomy are preserved.

Finland is still at early stage

In Finland, true compounder platforms remain scarce. Among listed companies, Boreo has adopted a compounder approach, while Korpi Capital is pursuing a similar strategy in the private markets. Both, however, are backed by Swedish capital.

Historically, elements of the model could be observed in industrial groups such as Etola and Aspo Plc, but in practice these companies have moved away from systematic compounder strategies. As a result, large-scale, disciplined compounder platforms have yet to gain meaningful traction in Finland.

Why is this the case? Finnish investors and corporate groups have traditionally emphasized synergies, integration, and consolidation. Transactions are often followed by rationalization and rebranding. Compounder strategies, by contrast, rely on trust in decentralized management and long-term value creation, an approach that does not always align well with quarterly reporting cycles and short-term performance expectations.

Furthermore, compounder platforms typically focus on acquiring smaller, locally rooted businesses, which may appear less attractive or strategically visible from a corporate headquarters perspective.

What has made Sweden a forerunner?

In Sweden, the compounder model has been part of the corporate landscape for 20 to 30 years. Serial acquisitions are widely accepted and understood as a coherent long-term strategy rather than as opportunistic deal-making.

The approach spans a broad range of sectors, including industrial services, building services, technical distribution, renovation and construction, manufacturing, software, and a wide variety of service businesses. Companies such as Vitec Software have demonstrated that the model is equally applicable in industrial and software contexts, provided the underlying businesses generate stable cash flows and have a proven operating history.

Importantly, Swedish investors have also recognized that compounder strategies are not constrained by sector boundaries, nor do they require continuous innovation. In fact, more traditional and operationally “boring” businesses often prove to be the most suitable foundations for long-term compounding.

A new opportunity for Finland

Finland is home to many stable, profitable, and long-established companies that fall outside the typical investment criteria of growth funds and traditional private equity. These businesses represent precisely the type of assets that compounder strategies are designed to own and develop: resilient companies capable of generating consistent value across economic cycles.

Adopting a compounder mindset could also offer Finnish investors and industrial groups an alternative growth model, one that prioritizes long-term value creation over short-term narratives. At the same time, it would provide entrepreneurs with a credible ownership alternative in M&A processes.

Carner’s perspective

Carner has been actively involved in supporting the implementation of compounder strategies in Finland as an advisor to Swedish platforms, including Triton Partners and Vitec Software. The market conditions are in place: entrepreneurs are seeking continuity, and empirical evidence supports the effectiveness of the model.

This represents a unique opportunity to combine strategic business development, values-driven investing, and the long-term future of Finnish ownership.

There is clear room in the market for Finnish compounder platforms, and no industry is inherently unsuitable for the strategy.

The remaining question is straightforward: who in Finland will take the initiative to build the next Berkshire Hathaway, the Finnish way?

Text: Mikko Sistonen

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