EURAZEO_REGISTRATION_DOCUMENT_2017

GOVERNANCE Risk management, internal control and main risk factors

Factoring in risks in the Company’s key processes 3.4.1.1 In its bid to create value, Eurazeo has organized its activities around a certain number of processes which play a key role not only in creating value, but also in preserving value. Eurazeo’s business processes: Detect/Invest/Transform/Enhance value The organization and procedures implemented by Eurazeo in the conduct of its private equity business seek, in particular, to: optimize the detection of investments with growth prospects; ensure that investment decisions are made with full knowledge of identifiable • risks liable to affect its value; achieve the planned transformation of each investment; • optimize the timing and the terms of the sale of its investments. •

Transform 2

Enhance value 3

Detect/Invest 1

Detection/Investment decision In each investment division, dedicated investment teams meet on a collegiate basis at least twice a week to address deal flow, the monitoring of investments and preparation for the divestment of portfolio companies. The deal sourcing team (Eurazeo Development) attends all meetings devoted to deal flow. Each investment opportunity is documented through formal monitoring as the analysis of each opportunity progresses. The analysis of each new investment opportunity is led by one or more members of the investment teams in accordance with specific procedures defined under the authority of an Investment Director. The risks associated with each investment opportunity are reviewed and reassessed based on progress (see Section 3.4.2.2, Risks related to the vetting of investment projects, p. 195). At a later stage, opportunities are discussed by the Executive Committee and when significant interest is shown, the decision is made to perform due diligence procedures and commit the related expenditure. During this stage, the CSR, Risk Management, Legal and Human Resources Departments are also involved in the risk analysis under the supervision of the Chief Financial Officer, member of the Executive Board and the General Counsel. They assist the investment teams with the performance of risk analyses in their respective areas of expertise and due diligence procedures on the risk areas identified as a priority. They have developed common risk guidelines which are an essential tool for analyzing the investment opportunities of the different divisions. These teams represent a “second line of defense” behind the investment teams for risk prevention. The investment or divestment decision is examined by the Executive Committee and made by the Executive Board before being presented for authorization to the Supervisory Board (when the investment exceeds €200 million and in practice for all divestments) for the Capital, Croissance, Brands and Patrimoine divisions. The Finance Committee is consulted and issues an opinion and recommendations to the Supervisory Board. The Eurazeo PME division has specific governance rules.

Transformation / Value enhancement Under the supervision of the investment teams, the priority and/or transformational projects focusing on risks and opportunities identified during the analysis phase of a company are launched post-acquisition. The investment and Corporate (CSR, Risk management, Legal and Human Resources) teams may also assist management of the relevant companies with the conduct of these projects. Portfolio companies (and particularly their value creation projects, performance, risks, etc.) are monitored weekly through combined team meetings and bimonthly through meetings of the Executive Committee. In addition, during the development and transformation phase of an investment, the management of each investment produces a monthly report (performance, outlook, business review, risks, etc.). In addition, the set-up of Audit Committees in the investments offers an additional means of monitoring the efficiency of risk management and internal control in the portfolio companies (see Section 3.4.1.2 on the following page). Net Asset Value (NAV) is a key measure of value creation over time. In order to produce the NAV, a process was introduced to update valuations of unlisted investments every six months. To coordinate this process, an employee centralizes the work documented by the various participants. An analysis is produced prior to each collegiate valuation review meeting. This meeting represents a review stage before the determination of valuations and NAV by the Executive Board. At the same time, valuation work is sent to an independent assessor who ensures, using a multi-criteria approach, that valuations are reasonable (see Section 3.4.2.1, p. 194). Periodic valuation of unlisted investments to determine the Net Asset Value

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Eurazeo

2017 Registration document