Sigma and CWG Merger Risks and Management Overview
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Risks that are Common to Both Sigma and CWG
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Key Risks
Key Risk
Attracting and retaining key
talent
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Summary
Each Merger Party relies on the experience, expertise and knowledge of specific individuals and the unexpected departure of key team members from their respective business could significantly impact
that business' operations, strategic decision-making and overall performance.
Existing management personnel have extensive experience in, and knowledge of, the pharmacy industry, as well as knowledge of the relevant Merger Party's business and relationships with its
respective franchisees and key suppliers. As such, the loss or absence of key individuals could potentially lead to disruptions in supplier relationships, regulatory knowledge, customer interactions and
day-to-day management, potentially affecting the relevant Merger Party's ability to adapt to market changes and capitalise on opportunities. Whilst each Merger Party has succession planning measures
in place, including talent development, there can be no assurance that appropriately skilled personnel would be identified and retained in a timely fashion (particularly as competition for personnel and
key talent is high in this landscape), nor that the transition to new leadership would be without disruption to the business. Furthermore, the success of a Merger Party is linked to the success of its
franchisees, such that similar considerations exist with respect of their retention and ability to attract key employees.
Outside of key management, the Merger Parties' businesses are labour intensive and require a significant number of personnel to operate efficiently (including in relation to the respective wholesaling,
marketing, logistics, franchising and in the case of CWG, the online retail aspects of their businesses). Given the tight labour market conditions in Australia and the high level of demand for employees,
there is a risk that a Merger Party could be unable to secure the staff that it requires, which may have adverse impacts on that Merger Party's operational stability and performance. In addition, the
geographic location of some of the Merger Parties' operations have small labour pools with heightened competition from other local businesses, which can make it more difficult to attract and retain
labour.
If a Merger Party is unable to attract and retain a sufficient number of qualified employees at reasonable costs, its business and operations could be negatively affected. There can be no assurance that a
Merger Party will be able to retain employees in key positions or recruit a significant number of new employees with appropriate technical qualifications to compensate for the loss of employees or to
accommodate its future growth. The ability to meet labour needs while controlling costs associated with hiring and training new employees is subject to external factors including the actions of other
businesses, unemployment rates, prevailing wage legislation (including applicable awards), the industrial relations landscape and changing demographics. There is a risk that adverse changes in these
factors may occur which would inhibit a Merger Party or its franchisees' ability to hire and retain employees or increase the cost of employing them.
The consequences for the Merger Parties include financial loss, business continuity issues, increased costs associated with recruiting and training, and increased health and safety risks, any of which
could adversely impact the Merger Parties' competitive position, financial performance or reputation.View entire presentation