The bold vision of KH-Koneet found someone to share the risk
Sievi Capital invested in KH-Koneet in 2017. Since then, the company has expanded to new sectors, entered the Swedish market and more than doubled its net sales. The bold vision of entrepreneurs has borne fruit while the company has retained its distinctive spirit.
In 2017, entrepreneurs of KH-Koneet Group Teppo and Timo Sakari and Kari Salo faced an important decision. Established in 1996, the company importing machines had grown over 20 years into a highly profitable company with net sales of around EUR 50 million. For a few years, however, growth had come to a standstill. CEO Teppo Sakari had a bold vision of where the company should aim next, but the entrepreneurs felt that the risk was too great.
“We wanted to find an investor to share the risk and who would be good match for a small family business like ours,” says Teppo Sakari.
The Sakari brothers had been importing earth-moving machines from Sweden since the 1980s. The recession of the 1990s interrupted operations, but in 1996 they re-established KH-Koneet with the same concept and started importing used road construction equipment and mini excavators from Sweden and Germany. KH-Koneet started importing new machines in 1999. Around the same time Kari Salo joined the company as a third entrepreneur, bringing financial management expertise with him.
In the 2000s, the company grew vigorously at an average rate of 15 per cent per year. There was a steady demand for machines, and the customers learned to associate the company as a “responsible machine seller” who held up their end of the bargain. CEO Teppo Sakari says that everything is arranged with the customers so that both are satisfied.
“It has carried us far, because the customers appreciate our culture.”
Bold vision got the green light
Sievi Capital is looking for excellent companies with growth potential. CFO Markus Peura describes KH-Koneet as a “strong company in its own sector”, which caught Sievi Capital’s attention. Negotiations on the transaction lasted eight months. According to Peura, there was a lot of talk about the company’s vision, strategy, as well as, preserving the corporate culture of KH-Koneet.
According to Teppo Sakari, the negotiations were conducted in good spirit, even though there was a presence of sadness over relinquishing. At the same time, it was clear that all entrepreneurs would continue in the company even after the acquisition.
The vision Teppo Sakari had before the transaction was not the most modest. KH-Koneet was aiming to become the leading machine dealer in the Nordic countries. First you had to enter the machine rental sector, then start importing large machines and finally go to Sweden. Sakari believes that he demonstrated the desire to realise the dream and his ambition was credible in the transaction negotiations.
At the same time as the negotiations were held, Kesko was about to stop importing Kobelco’s large machines, and KH-Koneet had the opportunity to implement one part of its strategy. The future majority owner agreed to change the order of the strategy. On the following day, after the transaction with Sievi Capital had been concluded, KH-Koneet acquired Kobelco’s business operations from Kesko. The following year, Crent, which focuses on machine rental, was established.
Growth accelerated at full speed
Sievi Capital’s active ownership has been most evident in the development of financial management of KH-Koneet, consistent work of the Board of Directors and building of the right team. According to Teppo Sakari, the organisation has been built with more courage when a private equity investor is sharing the risk
According to Markus Peura, the growth of KH-Koneet has accelerated at full speed over the past three years and the company’s net sales have grown from EUR 50 million in 2017 to EUR 120 million last year. Behind the growth are, for example, acquisitions made in Sweden. In 2019 KH-Koneet acquired a Norwegian owned company Beck Maskin Sverige AB and in 2020 S-Rental AB.
“Markus Peura and Tuomas Joensuu from Sievi Capital played an important role in the acquisition and financing arrangements. They are hard-core professionals,” says Teppo Sakari.
According to Sakari, the corporate culture and spirit characteristic of KH-Koneet have remained unchanged during the time of the new main owner. He believes that the company’s personnel have “the highest degree of employee autonomy the sector”. Now the goal is to take the same spirit to Sweden, where the aim is to encourage the personnel by creating a sense of belonging to a winning team.
“Everything has gone better than we thought. Nothing has changed in the culture and spirit of KH-Koneet. It was a bold act by Sievi Capital to honour the spirit of the company. If the spirit had been extinguished, the story would have been completely different,” Sakari says.
“The motive behind the acquisition was for us entrepreneurs to repatriate some of the fruits of the 20 years of labour and achieve our dream. Our vision is on track and moving in the right direction, but much remains to be done.”