Oddbjørn Dybvad (REQ Capital) - Acquisition-driven Compounders

In this episode we speak to Oddbjørn Dybvad, co-founder of REQ Capital, an Oslo-based investment firm.  Oddbjørn manages REQ’s Global Compounders and Nordic Compounders funds, which focus on acquisition-driven businesses.  We discuss the entrepreneurial energy within these companies, why they are able to reinvest capital at attractive rates for a long period of time and how their diversified and decentralised nature makes them both resilient and adaptable. Show notes:[01:22] Oddbjørn discusses his career[02:26] The risk and return characteristics of acquisition-driven compounders[04:25] The influence of geography[07:01] Defining the different types of serial acquirer[09:12] Focusing on small/mid-caps with a long runway for redeploying capital[10:41] The diversification benefits of acquisition-driven companies[12:11] A preference for insider ownership, decentralisation and acquisitions funded by cash[13:29] Communicating with investors in a different way[14:53] Key person risk and the sustainability of culture[16:28] Change at Diploma[18:07] Harnessing entrepreneurial energy through decentralisation[20:43] Decentralisation and adaptability[21:59] Motivating behaviour through simple incentivisation structures[24:52] Focusing on track record and management[25:56] Constellation Software and the decentralisation of capital allocation[28:07] The valuation differential between public and private markets[30:51] The attractions of selling to acquisition-driven compounders[33:06] Looking for the dual engine of organic and inorganic growth[35:04] The underlying characteristics of REQ Global Compounders[37:13] Becoming more conscious about evaluating risk and management[39:07] Finding people who are process-oriented and have a long-term mind-set[39:55] Learn from your mistakes