Talenom: Expands into Spanish market - Danske Bank

Talenom announced today that it has acquired Spanish accounting firm Avail Services SL in Barcelona and expanded to the Spanish market. Talenom has previously communicated that it intends to enter a third market this year. Spain is one of the largest accounting service markets in Europe, sized EUR10bn. In comparison, Talenom’s previous total addressable market in Finland and Sweden combined was around EUR3bn. Moreover, Spain has over 3m companies, of which 99% are SMEs, being ideal sized customers for Talenom.

By the CEO comments, Talenom has monitored Spain for a long time actively, and sees the accounting market there accelerating towards digitalisation which makes the time to enter right now attractive for the firm. Furthermore, Talenom’s international expansion in Sweden has boosted the confidence of the management that the company is ready to enter new, larger avenues. Next steps in Sweden is to localize the software and start to focus more on organic growth. Jointly with the Spanish acquisition, Talenom also announced a small acquisition in Sweden, providing exposure to payroll accounting in Sweden.

Additionally, one motivation to enter Spain instead of for example Germany, seems to be the similar regulatory landscape than in Finland (so no special permits needed to provide accounting services), whereas in Germany there are some hindrances regarding regulation. Overall, in our view, Spain provides huge potential for Talenom, immediately expanding its total addressable market to approx. EUR13bn with service concept that has been successfully implemented internationally.

Overall, announced acquisitions are relatively small (Spain EUR0.9m & Sweden EUR1.2m in 2020) so Talenom does not lift its 2021 guidance (EUR80-84m sales and EUR14-16m EBIT). However, Talenom has now made three small acquisitions without upgrading, decreasing the potential for the organic growth within the guidance. We recently updated our view of the case with a longer report.

https://watermark.publication.danskebank.com/COMMR_177457.pdf?data=7LJnOG5pyfbYXtPKv45boQlkNtUQyBCad5B7banaRyPbyNLb0C4%2Btc1J6Q3VL1WF4to1nTV2Su8SFTJnHwEnmpvUf6jBH2IfQU0E1uQGFkvbIdOfJmyHfOXHUluy4SkEeJ%2FsTgEJmc1NGHblgUcWpPEnqqVFwcnIb8Ep6q08pABxda9bXMKojF1G