paolo colonna, chairman and md, schroder associati spa - milan milan, 9 november 2001 creating value...
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Paolo Colonna, Chairman and MD, Schroder Associati SpA - Milan
Milan, 9 November 2001
Creating Value through International Build-UpsLessons to be shared
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Schroder Associati
Balancing Organic and External Growth
Milan, 9th November 2001
Paolo Colonna
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Schroder Associati
BUILDING GROUPS TO CREATE VALUE THROUGH SYNERGIES, SIZE AND TURNAROUNDS
Fund Operating Partner- managers- entrepreneurs
Company 1 Company 2 Company 3
HOLDING
Company 4
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Schroder Associati
WHY GROUP BUILDING?
• Market globalization• Sectors consolidation• Many restructuring opportunities• Existing potential synergies• Size/multiples relation• Minimum size for IPO
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Schroder Associati
ONE EXAMPLE: FERRETTI
•Very successful company
•Industry technical leadership
•Good management team
•Fragmented family ownership
•Management strong willingness to grow in a very dispersed business
•Sales 90 Bil. it.
•Exit of non operating family members
•Leveraged transaction
•SVIF II as majority shareholder
•Large management share incentives
Initial Situation 2/1998 The Acquisition
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Schroder Associati
FERRETTI
Acquisitions Development
Company Custom Line Pershing Bertram CRN Riva Mochi
Product Flying Bridge Open Fisherman Megayachts Flying/open Flying Gozzo
Success’/Turnaround - S T T T T S
Sales at Acq. (Bil. Lit.) 0 18 38 - 20 0 40
Date 6/98 9/98 11/98 1/00 5/00 7/00 9/01
Apreamare
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Schroder Associati
THE STRATEGIC LOGIC OF THE ACQUISITIONS
•Products complementarity
•Top position in their segments/brand/image
•Respect independence/specific values
•Turnarounds building on real competitive strength
•When possible, at manageable distance
•Financial leverage
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Schroder Associati
KEY ACTIONS OF THE INDUSTRIAL ACQUISITIONS
•Heavy investments in product line
•Involvement of existing successful entrepreneurs
•Large exploitation of synergies: distribution, purchasing, R&D, etc.
•Keep spirit/culture of each brand: designers, components, etc.
•Gradual cross-fertilization
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Schroder Associati
FERRETTI
Development and Professionalization at Group level
Turnaround of companies in difficult shape
New organizational structure
Hiring of new management both for holding and companies
New control systems
Further internationalization
Heavy investment in new production capacity
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Schroder Associati
FERRETTI
Sales Development (Bil.Lit.)
IPO : 23 June 2000
91 110
234
370
520
1997 1998 1999 2000 2001
IPOACQ.
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Schroder Associati
KEY LESSONS
•Magnet
•Leadership
•Management role differentiation
•Walking good-will
•Synergies
•capex/development
+ YOU NEED LUCK
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Schroder Associati
Building Groups To Create Value Through…….
•Synergies You become an Industrial Buyer
•Size IF focused/coherent- management- credibility/Appeal- IPO
•Turnarounds - Start from a successful rock (magnet effect)- Turnarounds add ons cheaper (still risky)- High/quick value added