Nils Herzing of Shareholder Value Beteiligungen AG presented his investment thesis on SDI Group (UK: SDI) at European Investing Summit 2024, held from October 29-31, 2024.
Two Years On: Premium members, scroll down for an automated review of how this thesis played out from October 2024 to October 2026.
Thesis Summary
SDI, founded in 1984 and AIM-listed in 2008, is a micro-cap UK serial acquirer of manufacturers of scientific instruments and components. The company operates through 14 subsidiaries. These are high-margin businesses with medium-wide moats. The operating businesses are largely independent of the economic cycle due to life sciences end-markets.
The group typically acquires small businesses with EBIT of roughly £1 million for 5-6x EV/EBIT. Since 2014, SDI has acquired 17 companies for an average multiple of 5.5x. Going forward, SDI plans to acquire 1-2 companies per year, and with this aims to grow revenue inorganically by 10% per annum.
The opportunity exists due to the recent departure of Mike Creedon, missteps in their recent M&A transactions, which were conducted by Mike, as well as the fade-out of profitable COVID-19 revenue.
Slide Presentation
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