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The Compounders: From Small Acquisitions to Giant Shareholder Returns
Every investor has heard of Warren Buffett, Charlie Munger, and Berkshire Hathaway. But what if there were other firms flying under the radar and taking their investing strategy to the next level—using powerful principles and techniques that you can learn from right now?The Compounders introduces these remarkable companies to a wider audience for the first time. Discover a select group of high-performing conglomerates, led by exceptional capital allocators. These firms, operating decentralized structures in fragmented markets, redefine acquisitive growth. Unlike conventional roll-ups or turnarounds, they target smaller private businesses, often family owned, with a precise, data-driven acquisition process. And while private market investors, they are publicly listed—avoiding the usual constraints of private equity.
At the heart of these organisations lies an astonishing reinvestment engine that seamlessly bridges top-tier capital allocation and the entrepreneurial drive of decentralized autonomy.
The Compounders reveals nine of these overlooked publicly traded conglomerates from around the world, united by a common vision of top-tier value creation—and explores in depth how these companies consistently outperform industry giants like Berkshire Hathaway and major stock market indexes.
Discover the strategies, learn from the success stories, and unlock the secrets of investing in acquisition-driven compounders—where diversity, resilience and scale come together to produce unmatched financial success.
***
Praise for The "An excellent summary of a too-little-known phenomenon … The authors' thoughtful, analytical approach brings this story to light with great verve."
—William N. Thorndike, Jr., author of The Outsiders; founder and managing director of Housatonic Partners
"An invaluable guide for all investors. The historical deep dives serve as perfect templates to help investors find the next generation of 100-baggers."
—Christopher Mayer, portfolio manager and co-founder, Woodlock House Family Capital; author of 100 Baggers
"For anyone seeking to understand how disciplined capital allocation and decentralized decision-making can create lasting value, this book offers both inspiration and instruction."
—Lawrence A. Cunningham, director, John L. Weinberg Center for Corporate Governance, University of Delaware; editor and publisher, The Essays of Warren Buffett
"A classic in the field of long-term investing. Highly rewarding and insightful"
—Adam Gerge, managing director, AEMG Capital; co-founder, Didner & Gerge Fonder AB
"A must read if you love studying outperformance in the public markets."
—Ian J. Cassel, CIO IFCM MicroCap Fund LP and founder of MicroCapClub
At the heart of these organisations lies an astonishing reinvestment engine that seamlessly bridges top-tier capital allocation and the entrepreneurial drive of decentralized autonomy.
The Compounders reveals nine of these overlooked publicly traded conglomerates from around the world, united by a common vision of top-tier value creation—and explores in depth how these companies consistently outperform industry giants like Berkshire Hathaway and major stock market indexes.
Discover the strategies, learn from the success stories, and unlock the secrets of investing in acquisition-driven compounders—where diversity, resilience and scale come together to produce unmatched financial success.
***
Praise for The "An excellent summary of a too-little-known phenomenon … The authors' thoughtful, analytical approach brings this story to light with great verve."
—William N. Thorndike, Jr., author of The Outsiders; founder and managing director of Housatonic Partners
"An invaluable guide for all investors. The historical deep dives serve as perfect templates to help investors find the next generation of 100-baggers."
—Christopher Mayer, portfolio manager and co-founder, Woodlock House Family Capital; author of 100 Baggers
"For anyone seeking to understand how disciplined capital allocation and decentralized decision-making can create lasting value, this book offers both inspiration and instruction."
—Lawrence A. Cunningham, director, John L. Weinberg Center for Corporate Governance, University of Delaware; editor and publisher, The Essays of Warren Buffett
"A classic in the field of long-term investing. Highly rewarding and insightful"
—Adam Gerge, managing director, AEMG Capital; co-founder, Didner & Gerge Fonder AB
"A must read if you love studying outperformance in the public markets."
—Ian J. Cassel, CIO IFCM MicroCap Fund LP and founder of MicroCapClub
234 pages, Paperback
Published September 2, 2025
73 people are currently reading
210 people want to read
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Displaying 1 - 6 of 6 reviews
October 13, 2025
This has potential, but it falls really flat. First, the book isn't well written. Not unexpected given English is not the authors' first language. What is worse is how repetitive the book is. It is painfully repetitive. Consequently, the pacing is really poor. What could be said in 1 paragraph takes 5. It is laborious to read through. I blame the editors more than I do the authors here.
Overall, the book also suffers from being too narrow. The focus is capital allocation compounders who pursue programmatic acquisitions. All focus on smaller acquisitions, push pricing, and run a decentralized business. This only adds to the repetitiveness. The thing that made outsiders so interesting is the diversity of leaders, businesses, and value creation stories. Here it is all the same.
I still think it is an instructive book. I enjoyed it and always love case studies, which are criminally under-represented. But this falls well short of The Outsiders and Lessons from the Titans.
Overall, the book also suffers from being too narrow. The focus is capital allocation compounders who pursue programmatic acquisitions. All focus on smaller acquisitions, push pricing, and run a decentralized business. This only adds to the repetitiveness. The thing that made outsiders so interesting is the diversity of leaders, businesses, and value creation stories. Here it is all the same.
I still think it is an instructive book. I enjoyed it and always love case studies, which are criminally under-represented. But this falls well short of The Outsiders and Lessons from the Titans.
October 27, 2025
The amount of capital available for reinvestment, the return generated on the capital and most importantly the duration over which these factors can be sustained.
Wealth creation is heavily back-loaded.
Let capital flow to wherever it will earn the best return.
Many parent companies challenge the original founder on pricing, with greater willingness to increase prices.
The average tenure of current CEO's at the compounders is 13 years.
Forecasts are only interesting when you look at them in the rearview mirror.
HQ shifted from control to being a service provider for the front line = customer centric.
The best way to know if a product or service brings differentiated value is if you hike prices and the customers still buy it.
Tindberg (INDT CEO from 1978-2004) refused to pay >5x EBIT for acquisitions.
Our success is our focus on generating positive CF. With the money we earn we buy quality companies that generate more money, which enables us to buy more high quality companies.
The more individuals and teams are involved in deal sourcing the more time top management has to focus on capital allocation decisions.
B&B was split into Addtech (industrial), Lagercrantz (electronics) and B&B (construction industry).
Jorgen Wigh has been CEO of Lagercrantz since 2006.
As a generalist acquirer Lagercrantz benefits from considerable flexibility, facing no sector-specific constraints that could hinder its adaptability.
Best practice in areas such as pricing, WC management and entrepreneurial principles is shared through annual gatherings and academies.
The company's incentive plans are directly tied to ROC and organic growth.
Rather than increase the size of each deal as Addtech grows Stenberg distributes responsibility among more people to handle a higher volume of transactions.
>80% of Addtech's acquisitions come from within its internal networks. Few brokered transactions.
When people are treated with respect, given autonomy and a sense of ownership, they take responsibility and remarkable things happen.
50% of Constellation Software's revenue is from Government software.
Conducts post-acquisition reviews 1 year after purchase sharing valuable company insights.
Most of Constellation acquisitions have $1.5-2.0m in sales.
Constellation now accounts for 3% of total software acquisitions.
A secret sauce in Constellation is pricing increases based on insights on client attrition.
Parts Manufacture Approval (PMA) authorisation is a program approved by the PMA. Ensures that the OEM's do not gain a monopoly over the sale of replacement parts for airlines.
Decades of evidence shows not difference in the reliability and quality of PMA parts.
Airlines save 30-50% compared to going directly to OEM's. Even more with LT contracts.
Heico makes acquisitions at 5-8x EBIT.
Berkshire bought Heico shares in 2024.
Heico employees contribute 6% of their salaries to 401K as a tax-deferred contribution. Heico matches with 5% of the wage in Heico stock.
Vitality index - % of sales derived from products launched in the last 3 years. 27% for AMETEK in 2024. R&D/sales 5%.
Halma has been a role model for Cicurel.
Judges bought GDS in 2012 = 33% of group earnings (Geo Tek wasnt the first big acquisition).
He seeks the arbitrage of being able to do good deals at attractive returns that exceed the cost of capital.
It is better to make a mistake in valuing a business than in judging its quality.
Selling businesses solely on the basis of valuation is often a mistake.
Wealth creation is heavily back-loaded.
Let capital flow to wherever it will earn the best return.
Many parent companies challenge the original founder on pricing, with greater willingness to increase prices.
The average tenure of current CEO's at the compounders is 13 years.
Forecasts are only interesting when you look at them in the rearview mirror.
HQ shifted from control to being a service provider for the front line = customer centric.
The best way to know if a product or service brings differentiated value is if you hike prices and the customers still buy it.
Tindberg (INDT CEO from 1978-2004) refused to pay >5x EBIT for acquisitions.
Our success is our focus on generating positive CF. With the money we earn we buy quality companies that generate more money, which enables us to buy more high quality companies.
The more individuals and teams are involved in deal sourcing the more time top management has to focus on capital allocation decisions.
B&B was split into Addtech (industrial), Lagercrantz (electronics) and B&B (construction industry).
Jorgen Wigh has been CEO of Lagercrantz since 2006.
As a generalist acquirer Lagercrantz benefits from considerable flexibility, facing no sector-specific constraints that could hinder its adaptability.
Best practice in areas such as pricing, WC management and entrepreneurial principles is shared through annual gatherings and academies.
The company's incentive plans are directly tied to ROC and organic growth.
Rather than increase the size of each deal as Addtech grows Stenberg distributes responsibility among more people to handle a higher volume of transactions.
>80% of Addtech's acquisitions come from within its internal networks. Few brokered transactions.
When people are treated with respect, given autonomy and a sense of ownership, they take responsibility and remarkable things happen.
50% of Constellation Software's revenue is from Government software.
Conducts post-acquisition reviews 1 year after purchase sharing valuable company insights.
Most of Constellation acquisitions have $1.5-2.0m in sales.
Constellation now accounts for 3% of total software acquisitions.
A secret sauce in Constellation is pricing increases based on insights on client attrition.
Parts Manufacture Approval (PMA) authorisation is a program approved by the PMA. Ensures that the OEM's do not gain a monopoly over the sale of replacement parts for airlines.
Decades of evidence shows not difference in the reliability and quality of PMA parts.
Airlines save 30-50% compared to going directly to OEM's. Even more with LT contracts.
Heico makes acquisitions at 5-8x EBIT.
Berkshire bought Heico shares in 2024.
Heico employees contribute 6% of their salaries to 401K as a tax-deferred contribution. Heico matches with 5% of the wage in Heico stock.
Vitality index - % of sales derived from products launched in the last 3 years. 27% for AMETEK in 2024. R&D/sales 5%.
Halma has been a role model for Cicurel.
Judges bought GDS in 2012 = 33% of group earnings (Geo Tek wasnt the first big acquisition).
He seeks the arbitrage of being able to do good deals at attractive returns that exceed the cost of capital.
It is better to make a mistake in valuing a business than in judging its quality.
Selling businesses solely on the basis of valuation is often a mistake.
This entire review has been hidden because of spoilers.
December 15, 2025
Book Review: The Compounders
The Compounders explores how highly successful acquisition-driven companies create long-term value through discipline, culture, and intelligent capital allocation. The book highlights that enduring compounders share a clear focus on return on capital, decentralized operating models, and a strong ownership mentality that empowers leaders at the subsidiary level.
A key theme is fundamental downside protection. The authors review companies with internal diversification, structured to survive shocks while continuing to grow. Sustainable growth is presented as a staged process: first ensuring survival and operational strength, then achieving exponential growth by deploying capital through multiple small, low-risk acquisitions. This approach closely echoes ideas from What I Learned About Investing from Darwin, emphasizing adaptation and gradual expansion rather than overexposure to catastrophic losses.
Culture plays a central role in successful compounders. Similar than The Super Organization Secret by Adrian Courtney, the book stresses a founder-led, decentralized culture built on “founder mentality,” a strong sense of purpose, and obsession with the frontline. This internal culture enables autonomy while maintaining alignment across the group.
From a financial perspective, The Compounders introduces working capital as a powerful proxy for asset-light businesses and a practical measure of capital efficiency, highlighting a profit-to-working-capital ratio above 45% as a benchmark of excellence. The “Focus Model” further refines capital allocation decisions by categorizing businesses based on their profit-to-working-capital ratios, guiding whether they should prioritize revenue growth, operational improvements, or capital efficiency.
Overall, The Compounders offers a thoughtful and practical framework for understanding how decentralized, value-driven organizations can compound capital over long periods while managing risk and preserving culture.
The Compounders explores how highly successful acquisition-driven companies create long-term value through discipline, culture, and intelligent capital allocation. The book highlights that enduring compounders share a clear focus on return on capital, decentralized operating models, and a strong ownership mentality that empowers leaders at the subsidiary level.
A key theme is fundamental downside protection. The authors review companies with internal diversification, structured to survive shocks while continuing to grow. Sustainable growth is presented as a staged process: first ensuring survival and operational strength, then achieving exponential growth by deploying capital through multiple small, low-risk acquisitions. This approach closely echoes ideas from What I Learned About Investing from Darwin, emphasizing adaptation and gradual expansion rather than overexposure to catastrophic losses.
Culture plays a central role in successful compounders. Similar than The Super Organization Secret by Adrian Courtney, the book stresses a founder-led, decentralized culture built on “founder mentality,” a strong sense of purpose, and obsession with the frontline. This internal culture enables autonomy while maintaining alignment across the group.
From a financial perspective, The Compounders introduces working capital as a powerful proxy for asset-light businesses and a practical measure of capital efficiency, highlighting a profit-to-working-capital ratio above 45% as a benchmark of excellence. The “Focus Model” further refines capital allocation decisions by categorizing businesses based on their profit-to-working-capital ratios, guiding whether they should prioritize revenue growth, operational improvements, or capital efficiency.
Overall, The Compounders offers a thoughtful and practical framework for understanding how decentralized, value-driven organizations can compound capital over long periods while managing risk and preserving culture.
October 20, 2025
Clearly the book is well researched but there just isnt enough meat for this to warrant a book. Case studies are great but it was incredibly repetitive, not helped by the fact the majority of the examples were carved out of the same company and followed the same blueprint almost to a T.
Honestly felt like the chapters were divvied up and then never reviewed to see how they blend. I think its still worth picking up if you see it on a library shelf if just to understand the basics of how these companies accomplished compounding.
Honestly felt like the chapters were divvied up and then never reviewed to see how they blend. I think its still worth picking up if you see it on a library shelf if just to understand the basics of how these companies accomplished compounding.
November 26, 2025
Well researched case studies and stories across all of the firms, but repetitive at times and at times jumped around.
Some good learning and one I would recommend to folks interested in better understand the acquirers and their models.
Some good learning and one I would recommend to folks interested in better understand the acquirers and their models.
December 8, 2025
Extremely high level, not worth the time for anyone with real financial or operational experience.
Displaying 1 - 6 of 6 reviews