The private equity investor changed their mindset: A-Insinöörit learned to see the opportunities instead of the costs

The answer was blunt: A-Insinöörit does not need a private equity investor and is not interested in discussing cooperation. The company would continue to grow based on its accumulated capital and cash flow.

It was year 2017. Ilkka Pentikäinen from Vaaka Partners had screened several interesting companies with which to build a success story. An open-minded engineering firm founded in 1959 was among them, and that's why he had contacted the company.

The rejection was direct. Dream on. Not interested!

As time went by, A-Insinöörit grew. The company's owners, around thirty designers and project managers with engineering backgrounds, considered what they wanted from the company's strategy. They wanted growth. How would they achieve it?

Jyrki Keinänen, who became CEO and shareholder of the company in 2014, was particularly supportive of growth. Under his leadership, the company had doubled its turnover to just under EUR 80 million and tripled its profits. Keinänen wanted to do the same again.

The company had already grown to the point where achieving an average annual growth rate of fifteen per cent would require not only organic business expansion but also more business acquisitions and internationalisation. The board of directors and the company’s shareholders' meetings saw signs of similarity between internationalisation and risk. For many long-standing engineers, A-Insinäärit was not only a workplace but also a significant part of their wealth. In these situations, the aim is often to protect assets rather than to increase them.

Could growth be achieved in Finland in the way it is wanted? No.

Is it possible to go abroad? No.

The discussions at the owners' meetings ended up going round in circles, and there didn’t seem to be a way out.

Industrial buyers knocked on the door of A-Insinöörit. The owners said "no" to foreign groom candidates at least as directly as they had said to Vaaka. The owners, committed to their company, were also unwilling to sell their life's work to a faceless listed company, where they would end up as yet another unknown unit number.

A-Insinöörit wanted to be a mother ship around which new ventures would be built. Their identity was strong, and their sense of self-worth was high.

Shareholders' meetings ran late into the evening. Little by little, a private equity investor started to seem not only a possible but also a suitable solution. For a private equity investor, internationalisation would not be a risk but an opportunity as long as it is done in a controlled manner.

The paths of Vaaka and A-Insinöörit crossed.

Perhaps it was Vaaka's perseverance and enthusiasm that finally convinced A-Insinöörit that the future was worth building together.

Matters were agreed upon in spring 2020, and the acquisition was announced at the end of the year. Vaaka Partners became the majority owner of A-Insinöörit; the old owners remained owners, and the key personnel became owners through an ownership programme.

With Vaaka's arrival, CEO Jyrki Keinänen not only got himself a new overcoat but also hands and discussion partners. What he needs from a private equity investor is expertise in mergers and acquisitions, and that is exactly what Vaaka considers they can offer.

"Vaaka's added value cannot be in operational work, but the acquisition of companies involves legalities that apply to all industries," says Ilkka Pentikäinen, a Vaaka partner on the board of A-Insinöörit.

The first deal involving Vaaka was negotiated so quickly that it almost slipped through the cracks even before the arrangement between A-Insinöörit and Vaaka was finalised. The idea is to buy good companies that will help A-Insinöörit become even better. "The transaction is done so that we can do something we have never been able to do before," says Jyrki Keinänen.

Since in a business acquisition, 1+1 must be more than two, the deals must create synergies. Keinänen and Pentikäinen believe this will come primarily from A-Insinöörit's ability to expand its range of services. Some synergies are also available from digitalisation, but the logic of possible internationalisation is built on a different basis, as the construction market, despite EU harmonisation, is still largely tied to national standards and working practices.

The achievement of the 1 + 1 > 2 formula is also helped by the transfer of A-Insinöörit's strengths—entrepreneurial spirit, customer satisfaction, staff satisfaction, and schedule expertise—to the target companies. Good practices go both ways.

Being able to sell more to the same customer, i.e. offer them more, is also to the customer's advantage: the fewer offices the customer must operate, the easier it is for them. Practice has also shown that cost bombs tend to occur in projects precisely when the boundaries between different companies are crossed. Within one company, information flows better, and people speak more or less the same language.

Already in one of the first acquisition meetings, Keinänen noticed how Vaaka's arrival had changed attitudes.

"Traditionally, business acquisitions were justified in terms of margins, factors, and balance sheet structures. Quite often, the question about the real reason behind the transaction was not asked. When we now consider how much we are prepared to offer, Vaaka's Investment Director and board member, Petrus Blomqvist, asked: “Well, do you want this?”

The others in the room looked at each other. Yes, they did! So, a bold offer had to be given. If the transaction supports the strategy, it is worth doing.

"It's easy to see the costs, but it takes more to see the profits," says Keinänen.