Acquisitions

STRATEGIES

oem has defined five strategic areas that are important to its future development and success and for achieving its financial targets.

Growth

oem will create growth organically, through acquisitions and geographic expansion. These three together will generate growth that meets the growth target. 1) Organic growth oem gives priority to organic growth. oem achieves organic growth by increasing its market share and expanding the range that the company offers its customers. oem's operations are expected to grow above the underlying market growth in those areas where the company is well established. In markets where oem has yet to achieve a position among the five largest players, its aim is to achieve considerably higher growth. 2) Acquisitions

Business combinations are central to oem's strategy for developing its operations. oem acquires companies and product ranges that strengthen its market position within current product areas in existing markets, and companies that add a brand-new range or give oem access to a new geographic market. 3) Geographic expansion

Geographic expansion into new markets will take place when it is possible for

OEM to become a prominent player by representing several of the company's suppliers.

Product range

oem shall offer a product range consisting of industrial components and systems from leading suppliers. The range is adapted to the local markets in which oem operates. oem' s key strategy is ongoing development of its range and it implements this strategy through partnerships with existing and new suppliers. Each local marketing organisation is also tasked with finding new products that will further enhance the competitive edge of the portfolio of offerings.

Marketing activities

oem shall have strong marketing activities based largely on face-to-face selling combined with the website as a hub in the sales process. Personal meetings are crucial to understanding customer needs, and a practical way for oemto offer its experience and technical expertise. Face-to-face selling is supported by digital and printed marketing communication materials.

Logistics

oem shall develop logistics solutions that deliver excellent customer service and quality and a high level of cost-efficiency. The Group has 15 logistics units. Each unit adapts its range to current operations and works towards greater coordination of the stockholding with other warehouses. In connection with many of oem's logistics units there are processing units that effectively provide unique adjustments for specific customers and the installation of products.

Employees and management

There should be a familial culture with a focus on entrepreneurship in all operations. oem shall give its employees opportunities to develop within the company, taking account of business goals and strategies as well as the employees' ambitions. Recruitment and employee strategies will lead to a significant number of leadership positions being filled internally.

Personal meetings are crucial to understanding customer needs, and a practical way for OEM to offer its experience and technical expertise.

The Group expands through acquisition

Acquisitions are central to growth creation and business development. Acquired businesses add new products, extend the customer base and bring new expertise to the Group. The aim is to add sales each year of approximately SEK 200 million through acquisitions.

ACQUISITION STRATEGY

oem primarily strives for three kinds of acquisitions. The first two described here are the most common:

• Operations with products that complement oem's portfolio in an existing market. • Operations that give access to a new geographic market for one of oem's existing product areas. • Operations of product-owning companies in one of the markets where oem has an established position.

Identifying companies for acquisition

The managers of all of oem's operations have a responsibility to look for and identify potential takeover targets. The Group also works with brokers, audit firms and banks, which helps ensure a flow of interesting acquisition targets. oem strives to engage in dialogue at an early stage with the owners of potential targets. This builds trusting relationships and gives oem an opportunity to present itself as a long-term owner that can help the acquired businesses to continue to expand and evolve. The ideal acquisition targets have a number of common features:

• Trading company or product-owning company with annual sales of SEK 30 - 250 million. • Represents manufacturers or has its own brands. • May have processing or simpler production facilities. • The selling entity sees it as advantageous to have an owner that is strongly committed to and interested in taking the business to the next stage of development.

Focus on the business

Central to oem's culture is a strong commitment to the operations and business. When analysing acquisition targets, there is therefore a strong focus on the business and areas such as the organisation, company culture, portfolio of offerings and future potential. In addition, an appraisal is performed to determine the effects of the acquisition on oem's other operations and what synergies could be achieved. oem makes acquisitions either by purchasing companies (with or without the previous owner remaining with the company) or by purchasing a company's assets.

Moving the acquired company to the next level of development

Based on its philosophy to be an active and long-term owner, oem creates a development plan during the acquisition process for the business it is acquiring. oem can, for example, make existing operations work to the advantage of the acquired company by opening up new markets and customer groups. The acquired company can continue to operate as a separate company or can be integrated into one of the existing operations. The basis for these considerations is what is best for the current business and where are the greatest opportunities for growth.