The Mellby model
HOW MELLBY GÅRD GENERATES LONG-TERM VALUE
Mellby Gård is a family-owned, long-term investor that endeavors to preserve the entrepreneurial spirit of its companies. A fundamental aspect of the business model is the ambition to be the largest shareholder in each company. Being this gives us the right opportunities to set the strategic agenda and assume overall responsibility for company development.
FROM PROMISING TO LEADING
Our objective is to take our companies from promising to leading. This describes the direction in which the companies are to develop, while confirming the value of all of the portfolio companies in the group. Whether a company is small or large, promising or leading, each has equal value and validation. It can take many years to reach a leading position, but the company should show promise on the way there, so that we can see the objective together. For us, there is a big difference between “promising” and “hopeful” – we avoid hopeful companies. The company shall have proven its business model and reached a certain size in terms of sales. To be promising, we must be able to see that it can become leading. Promising means there should be something unique about the business model. This may be in the product, the logistics, the organisation or something else. Leading means the company should be first or second in its vertical. That allows it to influence the prerequisites of the vertical regarding price, technical development and innovation, for example.
LONG-TERM OWNERSHIP WITHOUT REGARD TO EXIT
Another basic element is that Mellby Gård does not acquire companies in order to sell them at a particular time. All companies face challenges, encounter more difficult times, experience periods of transition and market downturns – put simply, things do not always work out as we envisaged. However, as an owner, Mellby Gård is not particularly stressed, since we always apply a long-term horizon. We continuously challenge our companies and support them when they need to make essential changes or investments to defend their leading positions or continue to develop.
ACTIVE CORPORATE GOVERNANCE FOCUSED ON RESOLVING THE COMPANIES’ PROBLEMS
We are an active owner. We maintain close contact with our companies, primarily through their CEOs and active board work. Mellby Gård always strives to hold the Chairmanship on the boards of our portfolio companies. We delve into the details to understand the companies’ markets and operations. The foundations for distinctive strategic decisions are often to be found in the details. Challenges often present no problem, but failing to understand that you face challenges is a major problem. In our corporate governance, we focus on the areas in our portfolio companies that are not working or where there are untapped opportunities. This generates a dynamic in our relationship with management, continuously helping improve the operations.
PARTNERSHIP PROVIDES SHARED DIRECTION
It is important to acquire a shared perception of the company between shareholders and management – it is we together who will develop the company. For this reason, we invest a lot of time finding an incentive structure focusing on ownership among management, so that we truly work together towards the same objectives.
HOLDINGS IN MULTIPLE VERTICALS SPREAD THE RISK
Mellby Gård has chosen to have a presence in four different verticals: industry, consumer goods, agriculture and services. From an overarching portfolio perspective, it is important to balance these verticals in order to spread the risks.