00:05:58 · Andrea Allegrini, Mikk
And so we went public to raise money for this kind of internationalization, but we ended up in selling the French business in late twenty twenty four for many reasons, mainly to reduce the risk due to the fact of staying there. In France, Lindbergh was not making any margins. We had a very aggressive competitor. And in the meantime, we realized that HVAC could be our the main driver of our future growth. And so we ended up in selling the company in December 2024 to focus our energy and capital in the HVAC opportunity in Italy. And here we are after a couple of years by we bought, as you said, 13 companies. And to date, HVAC is the biggest business unit of the group. [00:06:51] S0: Okay. Excellent. Now before talking about acquisitions, Amor Dzok, maybe shortly about the period of expanding to France, building a business there. I was what you guys are doing great is you're writing those annual letters. So I was going through this. And I think it was the 2021 or 2022 version where you guys shared that the opportunity is great, but one of the one of the tailwinds is the language part, the French language. So what else was the the bottleneck when it comes to expanding to a new country? Because there there are many guys listening there just operating in The US market, but at the same time, there are Europeans. And European, you know, there are so many different countries' regulations. So what... What's maybe some of the lessons and what do you experience when it comes to expanding to a foreign country? One being the language issue. What else?
00:07:46 · Andrea Allegrini
[00:07:46] S1: Now there, our main difficulties was the financial situation of our company. We first started as minority shareholder in France. And after a couple of years, the company was losing like 2,000,000 over a turnover of EUR 9,000,000. So we must change quickly, and so we decided to take over the majority of the company and to move in Italy all the strategic functions, so sales, administration, operations, and customer service. Basically, in France, we just had a couple of people in the warehouse and all the network of subcontractors doing the last mile delivery. And it was very complex mainly due to the fact of not being there. I I like to be close to my to my customer and to my colleague. And so that was difficulty number number one. But I think that the main lesson was... We have a couple of lesson we learned in the last year. So the first is that what has worked here maybe is not working in another country for many reason, not because the country is better or worse, but mainly because we have different approaches, different sensitivity even among our customers. And the second is to focus, so to choose which opportunity is better for a long term creation of value. And staying there, there, we had a huge business because logistics was 2x the logistic business we have here in Italy in terms of size, but we did no margin. And not having a protected business for us, it was really dangerous because despite delivering during the night, it was a pure logistic services, so no protection at all. While in Italy, built a really protected business. And so staying there was too risky, and we had a very aggressive competitor. And so losing the first customer, which was doing onethree of the turnover, was a way too dangerous to fall again in a very bad financial situation. And so we decided in a very pragmatic way to concentrate our business, energy and capital in more promising opportunities like, at the end of the day, the HVAC in Italy.
00:10:17 · Mikk, Andrea Allegrini
[00:10:17] S0: So it has been like a true evolution. So I'm trying to understand, how was the moment then? What did you see in the HVAC that made you realize that could be the next great chapter of the company when it comes to moving forward? [00:10:30] S1: Okay. The choice was made after a dinner with Mikkael. I can remember it very, very well because we used to talk with our customer number one in France, and we felt that he was talking with the... Our competitor. And so Mikkael said that I don't want to rely on one single customer. Lindbergh cannot rely on one single customer for the future. So sell... Let's sell France. And we decided it. It was, I think, July 2024. And in November, the deal was closed. We we sold to our main competitor, to the aggressive one. And... Because they they wanted to to make Lindbergh fall by taking the first customer of the group. And so, again, with a lot of pragmatism, we said, okay, let's give away the company no matter if we don't cash in the money we invested in the last years, but let's focus on HVAC. So we are not... We learn also not to be jealous of what we build. [00:11:39] S0: Okay. For for someone who has never studied the Italian HVAC market, Why is it such a attractive hunting ground, if we can say that? What what makes it so attractive for you? And and... Yeah. Give us an overview a bit, please.
00:11:39 · Mikk, Andrea Allegrini
[00:11:39] S0: Okay. For for someone who has never studied the Italian HVAC market, Why is it such a attractive hunting ground, if we can say that? What what makes it so attractive for you? And and... Yeah. Give us an overview a bit, please. [00:11:56] S1: Fragmentation is may... I think the the the main the main characteristics of this business. It's a business of EUR 12,000,000,000. I'm talking about installation and maintenance services, so no production and no distribution, with roughly 12,000 capital companies. So the average size is really, really small, plus more than 50,001 person companies. We call them artisan. And so this is point number one. Point number two is the... I think it's something that all the European companies are facing is the generational succession issue. So these companies are not finding someone or an industrial player willing to take over the company to grant continuity mainly when the salary is 60, 65, 70 years old. So he's really willing to to find a good... A permanent home for the people he he has worked with in the last decades. And so those two factors are a really good mix that bring us lots of opportunities in this in this sense, in terms of business, but also on the financial side. So good price and very good payment conditions.
00:11:56 · Andrea Allegrini, Mikk
[00:11:56] S1: Fragmentation is may... I think the the the main the main characteristics of this business. It's a business of EUR 12,000,000,000. I'm talking about installation and maintenance services, so no production and no distribution, with roughly 12,000 capital companies. So the average size is really, really small, plus more than 50,001 person companies. We call them artisan. And so this is point number one. Point number two is the... I think it's something that all the European companies are facing is the generational succession issue. So these companies are not finding someone or an industrial player willing to take over the company to grant continuity mainly when the salary is 60, 65, 70 years old. So he's really willing to to find a good... A permanent home for the people he he has worked with in the last decades. And so those two factors are a really good mix that bring us lots of opportunities in this in this sense, in terms of business, but also on the financial side. So good price and very good payment conditions. [00:13:17] S0: So there are a lot of those artisan businesses. So far, you've made 13 HVAC acquisitions. What has been the largest acquisition? What has been the smallest? And how is your overall thesis when it comes to those businesses? And has it changed over time? And maybe you can share, are you buying minority, majority? What is the structure there?
00:13:38 · Andrea Allegrini, Mikk
[00:13:38] S1: We always buy the majority, so 100% of the company. We don't do earn outs. So we just we just deal selling prices with the seller, and that's it. We discuss. And later, I think, we will talk about the payment condition. And but in general, so we buy the majority. The biggest one is EUR 8,000,000 turnover company closed in late twenty twenty five, while the smallest one was a 300,000 company. So today, I can say that our strategy is more like a sort of hub and spoke strategy. So if we want, for example, to enter a new region or a specific province, maybe in that case, we are buying a company with already a little structure for a company doing $4.05, 8,000,000 turnover. But right after, our work is to become attractive and to integrate all the smaller companies all around. For sure now, we are not focused on, yes, maybe we can buy a 300,000 turnover company, but it should be a bolt on acquisition with no effort from our side in terms of integration. So in that case, it's the local manager that we already of a company that we already own that must manage this kind of integration. And we did it in the past, and it's a very... We prefer this kind of acquisition rather than buying big companies, you know, also a matter of risk reduction. [00:15:08] S0: So what about the business owners? What about the post acquisition integration? Do they do they stay? For how long do they stay? And what have you seen over the past few years? Some guys still working with you or how has it been?