I. Table of Contents - ISS

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E. Acquisition History
53
Company Overview
Consolidation of the industry is an integral part of ISS’s strategy and consequently ISS makes a large
number of acquisitions every year in its key business areas. ISS has also done a few “platform”
acquisitions to enter new geographies and / or areas of activities.
In recent years, ISS has followed a strategy of selectively acquiring smaller companies, typically with
annual revenues of less than DKK 100 million (EUR 13 million), in order to strengthen ISS’s
competencies, enhance its service offering or establish critical mass. The volume of acquisitions has
varied in recent years depending upon market conditions. In the years ended December 31, 2002,
2003 and 2004, ISS made 31, 51 and 95 acquisitions respectively. ISS reduced its acquisition activity
in 2002 to concentrate on initiatives aimed at increasing its Operating Margins. These efforts included
contract trimming in Belgium, Denmark, France, Germany and the Netherlands in 2002 and in Brazil
initiated in 2003, in order to rationalize ISS’s contract portfolio following a period of significant growth.
Following completion of these projects, ISS increased its acquisition activity in 2004. ISS has
maintained a similar acquisition pace in 2005, completing 74 acquisitions through September 30, 2005.
ISS has a well-developed acquisition process, which relies to a large extent on its local management
teams in order to capitalize on their local market knowledge. These local management teams are
responsible for target identification and for most of the acquisition process through to integration of the
acquired business. ISS’s M&A department manages the acquisition process, primarily with respect to
valuation of the acquisition and negotiation of the material acquisition agreements, to the extent that its
centralized resources add value. This centralized department is responsible for quality assurance with
respect to all acquisitions. ISS’s group M&A department is more heavily involved in all larger
acquisitions and all acquisitions are approved by the Executive Management Board of ISS
Management A/S (“ISS Management”), and the approval of the Board of ISS Management is required
for large or strategic acquisitions.
Please see the following figure for an historical overview of ISS acquisitions since 2000, representing
a total of more than 375 acquisitions; in more than 30 countries, with acquired Revenues of more than
DKK 23 billion (EUR 3.1 billion).
Figure 14: Approximate Acquired Revenues, Historical Overview of Acquisitions 2000 –
9M-2005 (Approximate Acquired Full Year Revenues)
DKK million
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Source: ISS
0
6,363
4,384
1,930
1,280
6,095
3,150
2000 2001 2002 2003 2004 9M 2005
Cleaning Property Catering Office Support Integrated Facilities Services Other