EURAZEO_REGISTRATION_DOCUMENT_2017

3 GOVERNANCE

Risk management, internal control and main risk factors

Risks relating to competition with 3.4.2.4 other market players Identification of risks The Company operates in a competitive market due to the existence of a large number of private equity players. Strong competition for the most sought after assets, in a context of plentiful capital, can lead to very high acquisition prices or the retention of a significant cash position negatively impacting the Company’s performance. Competition can also result in Eurazeo spending considerable time and expense on investment candidates where Eurazeo’s proposal is not selected or see the loss of attractive opportunities. By opening an office in New York in 2016 (Eurazeo North America) and pursuing the goal of direct investment in US companies, Eurazeo is now active in the number one private equity market in the world and must get to know this market which has its own characteristics and an extremely large number of players. Risk management Eurazeo’s organization around different divisions (Capital, Brands, Patrimoine, Croissance and PME), combined with a team focusing investment on growth companies with positive underlying economic trends, helps identify and examine opportunities, and better understand vendors at a very early stage. This approach, which primarily seeks to identify non-brokered deals, offers a competitive edge in the sales process and can reduce exposure to competition inherent to brokered deals; fiscal years 2016 and 2017 are good examples with several transactions negotiated directly with industry and service sector players. Eurazeo has formed a team of American and French investors as part of the roll-out of its activities in the United States (Capital and Brands divisions). This team is supported by senior advisors with considerable experience in the industrial sector and an extensive business network in the United States, valuable in understanding the specific characteristics of the American private equity market. In 2017, the strategic partnership with Rhône offers Eurazeo a further opportunity to extend its transatlantic scope of action.

Risks relating to dependence on key 3.4.2.5 personnel Identification of risks Eurazeo’s capacity to seize the right investment opportunities, to optimize the engineering of its acquisitions and to capitalize on the value-creation potential of its investments relies on its reputation, its networks, the skill and expertise of its Executive Board members and its Investment Officers. As such, the departure of one or several of these key people could have an adverse impact on Eurazeo’s business and organization. Such a departure could alter not only the deal flow and projects underway at the time, but could also affect the management of Eurazeo’s teams and the Company’s relations with the management of its investments or with its investor partners in the case of third-party management activities. Similarly, the departure, prolonged absence or loss of confidence of key people in the management team of one of our investments, for whatever reason, could have an impact on operations and the implementation of the investment’s strategy. The existence of a shared investment vision with management is central to Eurazeo’s investment criteria. During the development phase, Eurazeo’s teams and the management teams of each investment work in a completely open manner to set out a clear vision of the goals to be achieved and action to be taken in the short-, medium- and long-term. The management of the Company’s investments has played – and continues to play – an important role in adapting to economic conditions. Risk management To minimize this risk, Eurazeo makes the alignment of the interests of investment shareholders, teams and management a key factor in promoting the continuity of management teams and value creation, notably through co-investment mechanisms and the progressive vesting of rights under instruments, such as performance shares. The Company also places emphasis on its close, regular and strong relations with management teams in its investments and the preparation of the succession of key people. Finally, close attention is paid to the drafting of key people clauses in the co-investment fund rules.

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2017 Registration document

Eurazeo