Corporate Strategy

Step for M & A:

Compile a target list

Contract the targets

Send/receive a teaser

Sign a confidentially agreement

Send/review the confidential information memorandum (CIM)

Submit/solicit an indication of interest (IOI)

Conduct management meetings

Ask for a submit a letter of intent (LOI)

Conduct due diligence

Write the purchase agreement

Close the deal

Handle any post-closing adjustments and integration

M & A strategy

«Can an M&A increase the strategic position of a company?»

• The definition of an M&A strategy defines the guidelines for growth operations

• The aim is not to get lost in a «merge mania» and take the right steps

• M&A requires many resources!

Key steps:

1) Do an assessment of the current situation

2) Define objectives

3) Develop the strategy

4) Plan M&A

operationTarget selection

Are there any candidates that match with our criteria?»

Internal target selection can be:

• Informal
• Systematic
• Market opportunity

Key steps:

1. Criteria selection definition(QLT o QNT)
2. Targets identification
3. Long-list
4. Long-list evaluation
5. Short-list

1b. Target proposal

Target company proposed by:

• M&A boutiques
• Strategy consulting companies (McKinsey, BCG, Bain etc.)
• Investment banking

... To get fees on the deal

SERVICES

TYPICAL 34

Step 1 Preliminary studies

Doing evaluating the process we should identify a list of the key factors of the company. Particular attention need the purchase of a Family business, which are the most difficult kind of organization to acquire.

For each target, the M&A team will create:

1. Company profile and strategy description
2. Ownership structure and governance analysis
3. Longitudinal analysis of performance, financial statement analysis (min 3-5 years)
4. Business plan analysis (if it
is publicly available) 5. Target company preliminary evaluation as a stand-alone entity, relying on publicly available data 6. Preliminary evaluation possibility to create value through buyer and target integration Step 2 Validation & negotiation Cost-benefit analysis At this step is clear one point which shows the rule of thumb of the investment bank company, buyer want to pay the less money as possible, by comparison the seller want to obtain the higher price as possible, the role of the investment banker/M & A team should work to balance the two needs and find a match between the two sides. "Are M&A benefits greater than its risks and price?" Two criteria: - Desirability - Feasibility Buyer starts a dialogue with the target ... and then negotiate the price! Key steps: 1. Potential benefits/synergies evaluation 2. Market evaluation 3. Shareholders evaluation 4. "Non disclosure agreement" for data exchange 2. Validation & negotiation: stand alone value 5. MoU WithIl testo formattato con i tag HTML corretti sarebbe il seguente:

The gained data, it is possible to evaluate:

STEP2. Validation & negotiation: stand alone value

1. Target stand-alone value (SA)

With the gained data, it is possible to evaluate:

1. Target stand-alone value (SA)
2. Max value that can be generated if would be created all synergies wished e min evaluation →→all synergies wished e min evaluation useful touseful to bid price creation (P) (PPSA) Max evaluation Value creation
3. Bid price orP SA Value captureMin evaluation

Is the value of the company itself, not considering the merge or the acquisition. We decide the 37max e min value and the bid price should be between them in order to finalize the deal. The bid price can create a value creation (more than the stand alone value) or a value capture (less than the stand alone value).

2. Validation & negotiation: letter of intent

1. Agreements
1. Non-binding offer

Contents of non-binding offer ResponsibilitiesValue ExecutionBid price Due-diligence definition timing 38

2. Acquisition business plan midterm plan (5-10 years) that explain after the M & A how we are going to work with the merged or acquired company.
3. STEP 3 due diligence and deal execution

Due diligence process show all the data that the other company want to obtain in order to evaluate the M & A, it happens in the data room where the consultants can obtain all these data.

4. Due diligence and deal execution

«How to assure the correct operation functioning?» Buyer helped from a pool of professionals is (legal, consulting, ecc…) to analyze each aspect that can have an impact on:

• Target price
• Operation benefits and risks
• Business plan management hypotheses

Due diligence: Strategic Due Diligence

1. Organizational structure
2. Market operations
3. Financial structure Financial Due Diligence
4. Deal financing
5. Legal
Legal Due Diligence 40 During the closing:
1. Bidding offer
2. Contract terms of the deal
3. Signing
4. Post-Merger Integration

"How do we maximise the value integrating the target company?"

• Integration is a long process (years) to finally stabilize the combined-entity (Legal Entity Merge)
• Required support from professionals and internal team

What do we need to integrate?

1. Strategic: strategy integration toward a unified direction
2. Legal: integration of legal entities (LEM)
3. Financial: financial plan integration
4. Operations: integration of factories, supplies etc
5. Technologies: integration of technologies and software
Organization: integration of organizational structures 505. evaluation post M & A Objectives: 1. Evaluate the benefits and performances compared with the initial hypothesis (M&A performance) 2. Learning from the experience (W&A What's next?) it means to understand how much we will change the governance and the operational structure, and what kind of archetypes we will apply after the M & A. The higher percentage of failure of M & A is primarily related to the integration phase, this mean that even though the M & A between Disney and 21th is already completed, it can happen that they will fail in integrating themselves each other. Integration: the moment of truth The most critical step of the deal Key points: A. Organizational interventions B. Post-merger integration archetypes Integration – Failure causes of the M&A 53 56 A BCG perspective BCG PERSPECTIVE: Some common mistakes of the integration part: Let'sGuarda alcuni problemi comuni nell'integrazione post fusione e acquisizione: a) Integrazione dei paesi (LEM) 1. Paese per paese, l'azienda procede alla fusione delle entità legali (LEM) 2. Principali problemi: integrazione culturale, dati, informazioni, finanziamenti b) Allineamento tecnologico e dei processi Come gestire le operazioni tra A e B? 1. Documentazione Fatture da pagare e da ricevere 2. Allineamento del database fornitori e clienti Codici clienti e fornitori 3. Reporting e software Coordinamento e allineamento nell'analisi Integrazione del software (SAP...) c) Dimensionamento delle risorse umane Come dimensionare il personale (costi e volumi)? Decidere quante persone abbiamo bisogno, allineare i costi salariali, allineare il rapporto tra uomini e donne, ecc. d) Posizione del centro di servizio condiviso Posizione B Fornitori Regno Unito Francia Italia Posizione A Fornitori e clienti 240 300 400 B 400 220 400 Posizione C Clienti Dove gestire le fatture dei clienti e dei fornitori

andpayments?Location A (combined) or Location B and C?

61S-s centre in a common phenomenon nowadays where companies place some services which areshared within all the business units. Normally the shared-service centre are placed in the emergingmarket. This means that after a M & A we need to understand where to put our new shared-service centre.

Final remarks & key take-awaysgrowth opportunitiesM&A deals represent huge tocreate value (not only economic!)keep attentionBut, of the following key points:objectives and rationale1. Define correctly the tounderstand the value you can generate from an M&Aentire process2. Plan very carefully thepost-merger integration,3. Plan the consideringarchetypes and depth of the integrationfocus on the strategy,4. Keep the without loosing thepractical and operational implicationsfocus on ofthe M&A deal 62DELOITTE: a multidisciplinary approachJust some years ago it has built the so called “Deloitte digital” in order to be

align with the contemporary needs. Have a digital business units it means to combine the technology and the innovation with the strategy, the main aim is to make company more competitive and to help them in drive a successful digital transformation. This transformation is quite hard due to is require a huge set of different capabilities. Moreover, the digital transformation change as the geography change, this is because it depends on the maturity of the digitalization of the country we are dealing with.

Some example of digital transformation initiatives:

• Digital transformation strategy define strategies to change the business model of the company in order to be align with the digital era;
• Digital experience combine customer insight with business objectives and experience design to create an innovative proposition;
• Advertising, marketing & commerce and creativity comes together with the advertising innovative marketing techniques. Here is where the business impact become
real thoughsuch operations;- Digital customer→ help company in create an ecosystem of solution that maximize the real thoughsuch operations; - Digital customer→ help company in create an ecosystem of solution that maximize the