Lifco: Dental Distribution & Culture

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But there was still a lot of potential in the market.

At the time, the market was developing, and dental customers were somewhat fragmented. In Sweden, only half of the market was regulated by public dental care. Twenty-five percent of the market was organized under one umbrella called Praktikertjänst, and the remaining 25% were independent dentists. In Norway, the pattern was almost the same. In Denmark, they had public dental care, but the dentists weren't as organized. Over time, dentists began organizing into larger groups, leading to integration both forwards and backwards. Today, it's a more complex situation on the distribution side, but I still think it's a very profitable market.

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The customers today are probably stronger, larger, and more organized. However, you still have a large group of products from many suppliers, so the distribution model still adds value.

Yes, because in distribution, manufacturers face many restrictions. There are a few significant players, but they don't have the logistics setup to directly contact customers. They need intermediaries to handle day-to-day business, allowing them to focus on producing materials in larger batches. Distribution centers like Lifco and the Finnish player play a crucial role. In America, companies like Henry Schein have expanded into Europe. However, Henry Schein struggles to secure contracts with public dental care due to the low price levels, which are nearly non-profitable in large tenders. Most profit comes from only half of the market, at least in Sweden. In Germany, the market is 10 times larger than in Sweden, which is bigger than Norway and Denmark together, and in Finland and the Baltics, the business is extremely small.

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It seems there are many other companies trying to do the same, including private equity and listed serial acquirers. They all come from Scandinavia. I don't know what's in the water there, but they see the success formula. Lifco has built a strong reputation and model, which is a strong point.

I think specific private equity companies look for good earnings and companies they can develop. The difference with Lifco is that they also look for companies that fit into the total business model. It's not just about acquiring a company; it's like adding a family member. Carl Bennet, the main shareholder, has a strong interest in knowing the business and understanding the basics of each company. Unlike other investors who mostly focus on profit development, Lifco looks for companies that fit into their total concept. It's about believing in people.

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