Paolo Colonna, Chairman and MD, Schroder Associati SpA - Milan

Milan, 9 November 2001

Creating Value through International Build-UpsLessons to be shared

Schroder Associati

Balancing Organic and External Growth

Milan, 9th November 2001

Paolo Colonna

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

Schroder Associati

WHY GROUP BUILDING?

• Market globalization• Sectors consolidation• Many restructuring opportunities• Existing potential synergies• Size/multiples relation• Minimum size for IPO

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

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

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

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

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

Schroder Associati

FERRETTI

Sales Development (Bil.Lit.)

IPO : 23 June 2000

91 110

234

370

520

1997 1998 1999 2000 2001

IPOACQ.

Schroder Associati

KEY LESSONS

•Magnet

•Leadership

•Management role differentiation

•Walking good-will

•Synergies

•capex/development

+ YOU NEED LUCK

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