Process
Investindustrial has a proven ability to identify attractive investment opportunities and to then design, refine and implement industrially-driven risk-adjusted strategies by leveraging intellectual capital and applying disciplined execution criteria to bring investee companies to the next stage of development, profitability and international expansion. The Investindustrial team works actively with portfolio company management to add value by applying operating and strategic experience to industrially-driven management buyouts and leveraged build-ups. Successful operational improvement remains the principal focus ahead of debt reduction and strategic repositioning, elements that are typically highly visible at the time of entry.
Sourcing
Unique deal generation is a key strength of Investindustrial and stems from the industrial background of the Principals. The firm has, through its long-standing regional presence in Southern Europe, developed a strong network of proprietary deal sources and contacts in the industrial, entrepreneurial and financial circles of the target countries. These sources have generated more than 80% of the transactions completed to date. Our strong reputation as a long term strategic and industrial partner results in deals being shown to Investindustrial on a proprietary basis ahead of purely financial investors, a trend that has continued throughout the recent economic downturn.
Selection
Throughout its history, Investindustrial has applied a rigorous screening process through which only 5% of the deals reviewed have passed all levels of due diligence and resulted in an investment. The screening process unfolds over three distinct stages which are:
Stage One: management level discussions, interviews with customers and suppliers, site visits and references on the management and the company.
Stage Two: the preparation of a Preliminary Investment Review, often comprising a competitive analysis study, an accountants report, an industry and market report, an ESG report, legal due diligence and a detailed business plan. Approximately 80% of deals reviewed over the past seven years have been rejected after initial screening.
Stage Three: a Final Investment Recommendation including full due diligence findings prepared by the relevant advisory team and submitted to the General Partner and the relevant investment company that are solely responsible for the final decision.
Development
Investindustrial created a dedicated Business Development Group to provide first class corporate development services to its investee companies. Following the close of a transaction, the Business Development Group takes an active role in maintaining close and on-going relationships with management teams to define goals, implement action-plans and to drive change across the entire holding period. Management performance and the execution of defined industrial value creation plans are closely monitored through tracking initiatives, benchmarking studies as well as competitor and market analysis. Value-add measures taken throughout the process include establishing management incentive schemes, providing introductions to important business partners, implementing standardised reporting and control systems (including costs), as well as expanding business operations and providing board representation.
Exit
The Business Development Group is responsible for the investment through to exit planning and will actively drive change in the portfolio company to maximise the viability of the exit strategy. Prevailing market conditions are closely monitored to identify the most opportune moment and appropriate buyer for the divestment of portfolio companies, at which point a recommendation will be made to the General Partner or the relevant holding company. In positioning a portfolio company investment for exit, ongoing dialogue is actively sought with potential financial or strategic acquirers in parallel to the consideration of a public listing. Whichever path to exit is pursued, our team has deep expertise in successfully managing the process due to Investindustrial’s long-standing industry experience. The preferred route will continue to be trade sales and in the past more than 50% of our exits have been realised as sales to industrial groups. An IPO or a sale to a financial investor remain viable alternative exit options for some investments.
