Econocom - 2019 Universal registration document

04 risk factors

operational risks

Pledges, guarantees, 1.8. collateral provided and borrowings Real security interests provided as collateral for borrowings or financial liabilities by the Group chiefly consist of receivables offered as collateral for its short-term funding. The amount of pledged and mortgaged assets is disclosed in note ژ 20 to the consolidated financial statements. Risks related to 1.9. external growth As part of its strategy, the Group continues to develop its business by seeking targeted acquisition opportunities. Acquiring and integrating companies gives rise to certain risks, including higher-than-anticipated financial and operating expenses, failure of the operational integration, which can lead to loss of major clients or the departure of important members of the acquiree’s staff and a decline in financial performance.

Integration of the acquired companies may also disrupt the Group’s existing businesses and lead to insufficient resources, particularly in terms of management. The synergies expected from an acquisition may fall short of forecasts or take longer to achieve than initially announced, and the costs of implementing these synergies may exceed expectations. The above-mentioned factors may also have a negative impact on the goodwill recognised in the consolidated financial statements (see also note ژ 9 “Goodwill and impairment testing” to the consolidated financial statements). Several years ago, Econocom group put in place an original integration and governance model for some of these new acquisitions (called “satellites”) so as to preserve their agility, boost their performance and competitiveness and generate synergies at Group level. The founding shareholders of these satellites have retained a non-controlling interest in the share capital and have a very broad level of managerial autonomy. The related integration risk is mitigated by the fact that taken individually, these transactions are relatively small.

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2019 annual report