The Mellby model
HOW MELLBY GÅRD GENERATES LONG-TERM VALUE
Mellby Gård is a family-owned, long-term investor that endeavours to preserve the entrepreneurial spirit of its portfolio companies. A basic part of the business model is to be the largest shareholder in each company. Being that affords us suitable opportunities to set the strategic agenda and assume overall responsibility for the company’s development.
LONG-TERM OWNERSHIP WITHOUT REGARD TO EXIT
Another basic part 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 contacts with our companies, primarily through their MDs 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. It is often in the details that the foundations for distinctive strategic decisions are to be found. Encountering challenges is often not a problem, but it’s a big problem if you don’t understand that you face challenges. 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.
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 organization or something else. Leading means the company should be first or second in its vertical. That allows it to affect the prerequisites of the vertical regarding, for example, price, technical development and innovation.
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 be present in five different verticals: industry, consumer goods, construction, agriculture and services. From an overarching portfolio perspective, it is important to balance the verticals to spread the risks. There are currently no plans to invest in other verticals, although we do not rule this out for the future.