Summa Equity: Building Purpose-Driven Organizations
In 2015, Reynir Indahl left top Nordic private equity firm Altor Equity Partners to found Summa Equity (Summa). After long contemplation following the financial crisis, Indahl was convinced the financial system was producing negative externalities and that the current private equity model adopted by most firms would no longer be successful. Summa was developed under a new private equity model that sought to "future-proof" businesses by focusing on long-term value creation and growth, in addition to traditional private equity practices of implementing best practices and productivity improvements. To find businesses best suited for long-term growth with disruptive potential, Summa invested in four thematic areas that were mapped to megatrends outlined in the United Nations Sustainable Development Goals (SDGs)-trends Summa believed presented long-term growth opportunities for businesses that presented commercial solutions for these challenges. In addition, Summa integrated Environmental, Social and Governance (ESG) issues to create value during the ownership phase and expand multiples. While ESG investing was practiced by many firms with a focus on compliance and reporting, Indahl wanted ESG to be a tool for value creation and growth. After a period of successful recruiting, fund raising, and deal completion, Summa needed to develop a set of practices and expectations across portfolio companies and partners. The case concludes with Indahl contemplating exiting Summa's first company. What should Summa look for in a buyer? Is sale price all that matters, or should a potential buyer share Summa's focus on building purpose-driven organizations with a positive social impact on the world? How can Summa maximize its impact, both through investment and voice? With impact investing taking off a critical question also was how to measure and report impact to its Limited Partners (LPs).