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FINANCIAL AND LEGAL INFORMATION
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Business description
Evaluating potential transactions
Once investment opportunities are identified, preparatory work
begins, as determined by the head of the investment team.
This first phase is intended to rapidly determine whether the
transaction would be in line with the strategy and investment
criteria of the funds as well as the priority and resources that
should be devoted to it.
At the conclusionof this phase, either the transaction is rejectedor
adocument is preparedcontaining informationmaking it possible
to validate that the transaction corresponds in principle to the
investment strategy and including a recommended investment
size and approach (due diligence, negotiations, structured
transaction, etc.).
This document is presented anddiscussed at theweekly partners’
meeting and results in a decision to pursue the transaction or not.
If necessary, it also gives rise to an expansion in the investment
teamanda change in the compositionof theApproval Committee
that will track the investment process.
The Approval Committee, in collaboration with the investment
teams, ensures that due diligence is properly carried out and
that favourable terms have been negotiated for each transaction
before an investment decision is taken.
As a rule, the investment teams use of a number of external
advisory firms toundertake studies andduediligenceprocedures:
on themarkets and thecompetitivepositioningof theCompany;
validating business plan assumptions;
validating the accountingand financial positionof theCompany
(net value, debt level, earnings quality and recurrence);
on legal, social andenvironmental risks, and insurance coverage;
on the skills of the target company’s staff.
Valuation studies are undertaken with the support of specialist
banks, and joint research on suitable financing, notably for
LBOs, is carried out with the partner banks. Finally, the services
of prominent lawyers are essential to draft the numerous
legal documents required (
e.g.
share purchase agreement,
shareholders’ agreement, and contracts with the management
team on the remuneration and incentive packages).
Asummary report on the benefits, or otherwise, of the acquisition
ispresentedby the investment teamto the InvestmentCommittee,
which thendecideswhether or not toproceedwith theacquisition.
A rigorous system for delegating authority is put in place for each
stage of the process.
MONITORING INVESTMENTS
For each new investment, a value creation plan is defined and
shared with the Company’s management team who will be
responsible for implementing the plan.
The investment teammonitors the companies in the portfolio on
both operational and financial levels. The team meets regularly
with the management of each company in the portfolio during
Board meetings or operational review meetings.
Tomonitor the potential, growth and valuation trends of portfolio
companies, Apax Partners LLP’s three cross-functional teams
(Operational Excellence, Digital andCapital Markets) canbe called
upon to bolster and optimise value creation for a given company.
These three teams, which are comprised of experts from various
technical fields, are ready to help and guide the management
teams of the portfolio companies to create value through specific
projects.
Amonthly report on themain financial and operational indicators
for all of the portfolio companies is reviewed by the partners.
The investment team in charge of each company in the portfolio
prepares a report that serves as a basis for the Monitoring
Committee meetings. The Committee meets throughout the
investment period. It reviews the post-acquisition plan and
assesses the progress made since the investment date.
In addition, all of the partners perform a complete portfolio
review twice a year. The objective of this review is to update the
information on each investment aswell as the expectedmultiples
and IRRs for each company in the portfolio. These updated
projections are then included in a performance report that serves
as aguide formanaging theoverall performanceof ApaxPartners.
Apax Partners has also implemented a set of administrative and
internal control procedures used to track, verify, manage and
document all financial and administrative transactions related to
the investments and to management of the funds.
The assets in the funds are valued according to the principles
described in the notes to the consolidated financial statements.
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REGISTRATION DOCUMENT
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ALTAMIR 2016