Nordic Capital GC Henrik Johansson on tough decisions and turning off the noise

There will have been plenty reasons to raise a smile on the face of Nordic Capital general counsel Henrik Johansson in 2022. The biggest highlight the outside world will have seen was the private equity house closing its largest-ever fund at €9bn in an extremely challenging macroeconomic environment. It even clocked in at €1bn over target. That type of confidence from financial backers will give Johansson and his eight-strong team heart going into this new year, and rightly so.

But ask him directly what the highlight was and it wasn’t something that would be noticed externally. It was something internal. Something that fundamentally shifts the capacity of the entire legal function at Nordic Capital. Something that enables his team to perform on a different level to how it has done so in the past.

The legal function at Nordic Capital has historically been twinned with the tax department to enable a seamless service between two vital functions of fund formation. But Johansson felt there was scope to do something different in 2022. A review of those groups saw the formation of a team focused solely on transactions, a team focused solely on funds and a smaller, nimbler team that straddles the two. Having dedicated personnel doing what they’re best at, Johansson says, is helping him to get the best out of both.

Last year was the culmination of a journey that Johansson’s been on since childhood. Coming from a family, which he describes as “always business-oriented and entrepreneurial”, Johansson was adamant that his career would take a instruction from his parents’ work ethic. However, instead of following their path to business school, he chose to get an academic background in law. After studying in Sweden’s fourth city Uppsala, he joined the country’s largest law firm by revenue Mannheimer Swartling (2021: €170m).

Once at the firm, Johansson joined the tax team. He’d always enjoyed maths classes as a child, so now working in the tax team as an adult lawyer offered a sense of nostalgia for the two years he worked as a pure tax lawyer. Mannheimer offers associates the chance to move around the firm in order to provide them with as broad a legal education as the firm can. A chance came up to join the corporate/M&A team at Mannheimer, arguably Sweden’s finest, and he jumped at it. What happened next is instructive of how Johansson would then operate later in his career at Nordic Capital.

After about a year of working with the M&A team, Johansson saw an opportunity to connect the dots between tax and M&A because Mannheimer didn’t have anyone who was doing both. He spotted the chance to combine the super technical tax advice with the more commercial, growth-oriented elements that come with a transactional practice.

“[Being in M&A is] very interesting because it’s closer to the business side and much closer to the action,” says Johansson. “I really liked tax and it wasn’t an easy decision when I went on to join the M&A team. After a year, I was asked whether I wanted to stay with M&A or would I want to go back to tax. Instead, I asked: ‘Can I please do both?’”

It was the first time in his career that Johansson had been able to demonstrate an ability to restructure service lines within a business. It was a skill he would demonstrate in his future in-house career.

Early steps with NC

Johansson’s decision to straddle tax and M&A at Mannheimer led him on a direct trajectory with Nordic Capital. The PE house was, and very much still is, an institutional client of the firm’s.

Johansson’s first instruction from Nordic Capital came in 2014. He was tasked with reviewing Nordic Capital’s entire governance structure, which would lay the blueprint for how it would grow, what it would target and where the optimal jurisdictions for its operations would be. Put another way, it was a key piece of work that was critical to his present employer’s latter success. That relationship also paved the way for Johansson to join the partnership at Mannheimer, eventually being made up in 2016.

As so often happens with these types of mandates, conversations between two parties develop and an idea was floated by Johansson. The GC role had been vacant for several years and they hadn’t found the right match. Would he fancy trying his hand at moving in-house to head up the legal function at Nordic Capital?

“It was not an easy decision and took quite some time to make,” reflects Johansson. “Not because I wasn’t excited – I was super excited about the chance. But I had just been elected partner at my previous firm, so for loyalty reasons I was conflicted about leaving the firm where I’d grown up so soon after that moment.”

Johansson left Mannheimer in 2018, just two years after joining the partnership. To its credit, the Mannheimer alumni connection with Nordic Capital is strong. Among the PE house’s present legal roster, five of the eight lawyers currently working there have passed through Mannheimer’s doors at some point in their careers. Alumni networks are a vital part of modern law firm management and the Swedish giant’s ability to provide legal talent for one of its marquee clients demonstrates impressive success in that area.

At the time of his arrival at Nordic Capital, Johansson raised the number of lawyers employed by the PE house from zero to one. It was an enormous job to handle. Prioritisation of resources and time became his key focus and he set out to ensure that Nordic Capital’s legal and tax functions were operating as efficiently as they possibly could be.

“When I joined, I thought: ‘Okay, how should you go about this?’ And in my opinion, the only way is to apply some form of structured approach to it,” explains Johansson. “You need to think and design an operating model, and also create a value creation plan, and about how do we slice this up in order to create the most value for the firm.”

Now he was in and could see the scale of the challenge ahead of him, Johansson started assembling those crucial in-house teams.

Turning off the noise

Going into 2022, the legal and tax team’s headcount stood at four people. Over the course of the year, that team doubled in size to eight. The standout hire of the incoming quartet was undoubtedly Stockholm-based White & Case M&A partner Jonas Lagerroos in May.

Lagerroos’ career trajectory was similar to that of Johansson’s, having spent two years as a partner at his own firm before making the move in-house. Though he did not join as the GC, Lagerroos filled a role Johansson desperately needed, head of transactional services. Lagerroos and Johansson had previously been associates together at Mannheimer, so his quality was already known well before his arrival.

With Lagerroos now settled in the team, the full composition of the legal and tax department at Nordic Capital comprises the following:

• Henrik Johansson, general counsel (responsible for Nordic Capital legal, dipping into the various parts with main focus on Fund Team)
• Carl Beyer, head of tax (responsible for tax and splitting his time between the transaction team and fund team)
• Jonas Lagerroos, head of transaction team
• Rebecca Esplund, legal manager – fund team
• Oskar Söderlund, tax director – transaction team
• Enken Cohrs, tax director – transaction team
• Two mid-level secondees, one more senior dedicated to transaction team and one split between transaction team and dund team

All of the private equity house’s lawyers are based in Stockholm, though it also has a couple of lawyers dotted in its offices in Luxembourg and Jersey, focusing on deal execution, fund establishment and some local law matters.

The most important element for Johansson to ensure that his team works in this manner is to enable them to “turn off the noise”.

“I think it’s super important to find the right balance between direct and indirect value creation,” Johansson explains. “Being involved in a deal is always great and it may create a lot of value in this specific situation. But doing that without also having standard instructions for external counsel and without having created a general playbook for future deals doesn’t create that much value in relation to the effort being put in. Having a model that you apply across the board for deals or other projects in the future – that is what creates a lot of value.”

Having the noise turned off has enabled Nordic Capital to thrive this year and, Johansson says, ensures that he can have much more frank and honest conversations with his panel firms. Baker McKenzie (which currently has a lawyer on secondment with Nordic Capital), Latham & Watkins, White & Case and Kirkland & Ellis are all understood to have places on the panel. The latter two firms will be sending secondees of their own from London to Stockholm in the next month to keep their relationships strong. There is no fixed term for these firms with Johansson adopting an “if it ain’t broke, don’t fix it” attitude.

It was the latter of these panel firms that led Nordic Capital to close its Nordic Capital Fund XI earlier this year. The advice, led out of London, included partners Anand Damodaran, Amy Fox, Andrea Renold, Alex Brodkin, Agne Eriksson, Aisling Campbell, Lorenza Prelz Oltramonti and Christopher Braunack. It was a stellar fund-raising for all involved and underlined what many around the City and Europe are saying: the Nordics will offer one of the best environments for deal activity in 2023 of any location in the world.

Johansson is ruling out any further growth in-house at Nordic Capital, at least in the short-to-medium term. His next move will see him consolidate the team and ensure that the lines of communication are well understood.

Johansson can be very pleased with his work at Nordic Capital so far in transforming what was an exceptionally lean in-house. The future will be less about transformation and more about integration. It requires a different set of skills entirely, but one that Johansson and Nordic Capital are well-placed to deploy.