The intricate task of finding the perfect buyer for a highly specialized business

A conversation with EQUA Simulation CEO Per Sahlin

EQUA Simulation AB is a Swedish company dedicated to developing state-of-the-art simulation software for buildings and tunnels. Founded in 1995, the privately held company was acquired earlier this year by Glodon Company Limited through its Finnish subsidiary MagiCAD.


With over 8,000 employees, Beijing-based Glodon was the first publicly listed enterprise in China in the field of construction engineering informatization. The company offers numerous big data and cloud-based services via its digital building platform to customers in over 100 countries and regions worldwide. Among these are MagiCAD’s building information modeling (BIM) software, which is used by thousands of companies in over 160 countries.


In the interview that follows, EQUA CEO and founder Per Sahlin explains what prompted the sale to Glodon, the synergies created by the deal, and the role played by Oaklins, which served as EQUA’s advisor on the transaction.

Why did you and the other stakeholders in EQUA decide to sell to Glodon? You founded EQUA in 1995, why sell now?

PER SAHLIN: EQUA is an unusual company with expertise in a small section of the BIM market. We have 40 employees, and half of them are PhDs. In the past, we operated more like a research group that does a little bit of business rather than the other way around.


But now, things have changed. One of the original founders passed away recently and another has retired. This prompted us to look for a partner who would buy out their shares and who could help guide us towards becoming a more traditional company. Under our arrangement with Glodon, we will continue to operate under our own brand, but as a subsidiary of MagiCAD, which was acquired by Glodon in 2014.

How long did it take you to find a suitable buyer? What was the process like? What role did Oaklins play in your search?

The time from when we made the decision to sell the company until we actually signed the agreement was more than two years. In hindsight, it would have been much better if we had begun working with Oaklins at an earlier stage. But we had been courted by a lot of investors, and we began by taking meetings with many of the people who had expressed an interest in us. It took us almost a year-and-a-half to get out of that mode. PER SAHLIN, CEO AND FOUNDER, EQUA SIMULATION AB SWEDEN

We had very serious discussions with three different parties before we signed on with Oaklins. One was with a very large industrial company, but we backed out of that deal because we felt that our small company would’ve been swallowed up and lost within its ranks. The other potential buyers were investment firms, but they were overly focused on the numbers and less so on our technology. Since our firm has been so focused on technological development, the valuation methods used by these firms tended to overlook or downplay our strong points.


We also had some discussions with other brokers before signing with Oaklins, but we were never really tempted to sign with them. With Oaklins, we hit it off immediately, plus they were strongly recommended by everyone that we spoke with. So, we moved ahead and signed a ‘no cure, no fee’ agreement with them, and immediately we felt that they were asking all the right questions to help us position and package the company.

Can you give us some perspective on the role and significance of building and tunnel simulation tools. What’s so unique about this technology? What are its most important applications?

SAHLIN: EQUA’s simulation software describes how buildings and tunnels function using equations, which is an approach that is very familiar to engineers. It’s taken quite a while, but this type of engineering-friendly, equation-based modeling has gained a lot of momentum in many different industries. There are, however, only a handful of companies that develop these types of tools, and most of them are geared for modeling large-scale industrial products like autos and airplanes.


What we have done is to develop tools for what I call ‘one-off’ simulation projects, such as a building, as opposed to products like autos that are mass produced. Tunnels are another example. We are the world leader in tunnel design simulation and the northern European leader in building simulation.


Buildings utilize around a third of the world’s energy, and making a building more efficient is one of the best ways for a company, or a city, to reduce its carbon footprint. But if you really want to construct an efficient building, you have to simulate it before you build it. And since building owners are becoming increasingly motivated to build efficient structures, this is the main thing currently driving our market.

Could you please elaborate on the synergies you hope to gain by joining forces with Glodon and MagiCAD.

SAHLIN: We’re hoping that Glodon will give us the muscle to introduce our tools into the Chinese market. Glodon also hopes to sell its services in Western markets, which would be another way for us to piggyback on them.

With MagiCAD, our markets overlap in a very complementary way. MagiCAD focuses on MEP, the mechanical, electrical and plumbing aspects of a building’s design. Working with them, we hope to promote simulation tools that are easy to use. But EQUA will continue to operate under its own brand identity, since in the markets where we are dominant, in Scandinavia and the German-speaking part of the world, we have a very good reputation and it would be a shame to waste that.


For the most part, however, building simulation is still not widely known or well understood. In most markets, our main challenge is missionary in nature: trying to get building owners to understand the benefits of simulating their designs. There are only a few tools in the market that are similar to ours. At this point, we don’t compete directly with the makers of these other tools, although we expect that eventually we will.

Given the market’s lack of familiarity with what we do, this was one of the key roles that Oaklins played. They took it upon themselves to present what we do in a way that investors could relate to; to act as the bridge between these ‘quirky engineers’ and investors. And they did a fantastic job packaging us. PER SAHLIN, CEO AND FOUNDER, EQUA SIMULATION AB SWEDEN

In hindsight, it was very naïve of us to think that we could’ve made this deal on our own. Selling a company without an advisor is much more difficult than trying to sell a house without one, and I will never attempt to do so again. But the reason we chose Oaklins was that their team was alert enough to learn enough about our highly specialized business to really help us.

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