Interpump Group: The Italian Compounding Machine That Conquered Industrial Hydraulics

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I. Introduction & Episode Roadmap

Picture this: a small workshop in northern Italy, 1977. A 30-something engineer named Fulvio Montipò hunches over a workbench, tinkering with high-pressure pump components. His obsession? A technical breakthrough that most industry veterans dismissed as impractical—replacing the heavy, corrosion-prone steel pistons inside high-pressure pumps with ceramic ones. That seemingly minor materials science innovation would launch one of Europe's most remarkable industrial compounding stories.

Fast forward to today, and Interpump Group's operations span 115 companies across 34 countries, with extensive reach in markets such as water jetting, flow handling, hydraulics, and power transmission. In 2024, the Group generated revenues of €2,078 million, making it the world's largest producer of high pressure piston pumps used in high pressure cleaners, car wash systems, water desalination and more.

The hook of this story isn't just about industrial equipment—it's about how a man with approximately €1,250 of his own capital and a contrarian technical insight built an industrial empire worth over €4 billion in market capitalization. More impressively, the company has delivered extraordinary returns since its December 1996 IPO, compounding wealth for patient shareholders through nearly three decades of business cycles, recessions, and global disruptions.

The first Group company was founded in 1977 in Sant'Ilario d'Enza on the initiative of Fulvio Montipò thanks to a radical innovation—the replacement of steel pistons with ceramic pistons. What began as a niche improvement in pump technology evolved into a global industrial powerhouse through relentless acquisition discipline, sector diversification, and an almost fanatical focus on margin protection.

This article explores the full arc of Interpump's remarkable journey: from Italian workshop to global hydraulics giant, the M&A playbook that has become its signature competitive advantage, the key inflection points that transformed the business, and what makes this one of Europe's most consistent compounders. For investors seeking to understand how patient capital allocation, founder-led vision, and operational excellence can combine to create extraordinary long-term value, Interpump offers a masterclass.

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II. Founder's Story & The Ceramic Piston Innovation

Every great industrial story needs an origin myth, and Interpump's begins in the verdant hills of Emilia-Romagna, Italy's industrial heartland. The company began in 1977 in Sant'Ilario d'Enza, Reggio Emilia, Italy. Founded by Fulvio Montipò, who continues to serve as the executive chairman. Montipò's prior experience included a management role at Bertolini, a company specializing in agricultural machinery and hydraulic equipment. He departed Bertolini in 1977 due to differing views.

The departure from Bertolini wasn't merely a career change—it was the crystallization of a conviction. His fascination with the mechanics of how things work laid the foundation for what would eventually become his life's work. Montipò's entrepreneurial spirit was evident from a young age. Starting in a small workshop in Italy, Montipò's vision was clear: to revolutionize the hydraulic equipment industry through innovation and quality.

What Montipò saw at Bertolini was an industry ripe for disruption. High-pressure piston pumps in the 1970s were workhorses of industrial cleaning and water-jetting applications, but they suffered from fundamental design limitations. The steel pistons that drove these pumps were heavy, prone to corrosion, and required frequent maintenance. He recognized that existing high-pressure piston pumps, which typically used steel pistons, were often bulky and lacked sufficient durability. His innovative solution was to introduce ceramic pistons, a material offering enhanced reliability, longevity, and cost-effectiveness.

The technical advantages of ceramic were compelling. Ceramic pistons offered superior hardness, exceptional corrosion resistance, and the ability to achieve tighter tolerances. This meant pumps could be smaller, lighter, quieter, and more reliable—a compelling value proposition for industrial customers. This new material improved the efficiency, performance and reliability of pumps and in just a few years the Group became the world market leader.

But starting a manufacturing company requires capital. Montipò's personal resources were modest by entrepreneurial standards. The origins trace back to Montipò's personal investment of approximately €1,250 (around $1,500 at the time). This was supplemented by startup capital from local entrepreneurs who were granted a 40% stake in the company. The confidence these local investors placed in Montipò's vision was well rewarded—the company's rapid growth allowed Montipò to buy back their stake within three years.

The company was founded in 1977 in the province of Reggio Emilia, in Sant'Ilario d'Enza. Initially production was linked to high pressure pumps and pistons characterized by small dimensions and new type materials that led the company to hold 50% of the market in a few years.

This rapid market capture deserves emphasis. Within just a few years of launching, a small Italian workshop had seized half of the global market for high-pressure piston pumps—a staggering achievement that speaks to the genuine superiority of the ceramic piston innovation and the hunger of industrial customers for better solutions.

This authentic revolution allowed Interpump Group to acquire from the early 1980s the world leadership, becoming in the sector, even for competitors, the recognized reference. The transformation from startup to global leader in under a decade established patterns that would define Interpump for decades: technical innovation as a wedge, rapid market capture through superior products, and the discipline to reinvest profits in growth.

For investors, the founder story matters because Fulvio Montipò didn't cash out and move on. Founder of Interpump Group SpA, Fulvio Montipò is a businessperson who has been at the head of 10 different companies and presently is Chairman, President & Chief Executive Officer at this company. Nearly five decades later, he remains the guiding hand, his technical intuition and capital allocation discipline embedded in the company's DNA.

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III. Building the Foundation: 1977-1995

The eighteen years between Interpump's founding and its IPO represented a crucial period of capability building, market dominance, and strategic expansion that positioned the company for its subsequent transformation.

The most fastest, flexible, powerful, high-performing automated packaging machineries are created here in Emilia-Romagna. Thanks to this excellent competence in this area, Emilia Romagna gains a worldwide reputation as "The Packaging Valley." But Emilia-Romagna wasn't just Packaging Valley—it was an industrial ecosystem nurturing excellence across multiple sectors. It is home to important industrial districts, such as the motor engineering, food, plastics moulding, biomedical, ceramics, machine tools and mechatronics industries, to name but a few.

This regional context matters immensely. Interpump didn't emerge in isolation—it grew within a dense network of precision engineering firms, skilled craftspeople, and a culture that prized technical excellence. The economy of Bologna is characterized by a flourishing industrial sector, traditionally centered on the transformation of agricultural and zootechnical products, machinery, construction equipment, energy, automotive, footwear, textile, engineering, chemical, printing and publishing.

Throughout the 1980s, Interpump consolidated its position in high-pressure pumps while beginning to eye adjacent opportunities. The Interpump Group is founded by Dr. Fulvio Montipò in 1977 in S. Ilario d'Enza (RE), as a result of his entrepreneurship and intuitions, including the use of innovative materials to produce high-pressure piston pumps that are more compact and manageable than those offered by competitors.

The product applications multiplied: high-pressure cleaners became essential in industrial settings, car wash systems proliferated as automobile ownership expanded, and water desalination projects in the Middle East created new demand centers. Interpump's pumps found their way into surface preparation equipment, industrial cleaning systems, and a growing array of specialized applications.

Its range of triplex pumps – i.e., with three pumping pistons – offers more than 60 models with flow rates that can exceed 2,600 l/m, pressure up to 1,600 bar, and power up to 1,200 HP, all designed and produced to provide maximum efficiency in heavy-duty and continuous applications. 1998 was an important year in the Group's commercial development with the acquisition of General Pump, now a top distributor of high-pressure piston pumps, accessories and spare parts in the United States.

Since the 90s it has begun to expand the areas of interest by acquiring other companies in the sector of professional cleaning machines and electric motors. This diversification represented Interpump's first venture beyond its original niche—a trial run of the acquisition strategy that would later define the company.

By the mid-1990s, Interpump had achieved something remarkable for an Italian SME: it had built genuine global market leadership in a specialized industrial segment. The company's pumps were the reference standard, its brand commanded premium pricing, and its manufacturing excellence had created barriers to entry. In 1996, Interpump Group was listed at the Milan Stock Exchange.

The decision to pursue an IPO reflected strategic ambition. With a strong market position in high-pressure pumps but limited capital for transformative expansion, public markets offered the currency—both literal and strategic—for the next phase of growth. The listing would provide acquisition capital, public currency for stock-based deals, enhanced credibility with acquisition targets, and governance infrastructure for scaling complexity.

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IV. Inflection Point #1: The 1996 IPO & Hydraulics Pivot

The IPO took place on December 16, 1996. This date marked far more than a capital markets transaction—it represented Interpump's declaration of expansionary intent and the beginning of its transformation from niche pump manufacturer to diversified hydraulics conglomerate.

In 1996 it was listed on the stock exchange and from the following year it began to enter the hydraulic sector with targeted acquisitions of companies in the sector. The pivot to hydraulics wasn't accidental—it was a calculated strategic move that recognized several key truths about Interpump's business.

First, the high-pressure pump market, while valuable, was ultimately bounded. Interpump already held approximately 50% global market share—further organic gains would be incremental at best. Second, Interpump's core competencies in fluid dynamics, precision machining, and industrial engineering transferred naturally to hydraulic components. Third, the hydraulics market was vastly larger, more fragmented, and offered multiple entry points for a disciplined acquirer.

The 1990s saw a significant shift towards strategic expansion beyond its core product line, incorporating acquisitions in professional cleaning machines and electric motors. A pivotal moment arrived in 1996 with its listing on the Milan Stock Exchange. The late 1990s were characterized by entry into the hydraulic sector through key acquisitions like PZB, Hydrocar, and Muncie Power Products, establishing Interpump as the world's largest manufacturer of power take-offs.

The acquisition sequence demonstrates the methodical nature of Interpump's approach. In 1997 the acquisition of PZB – Oleodinamica Pederzani & Zini S.p.A. takes place: a company active in the sector of hydraulically operated components since the first post-war period. 1998 sees the acquisition of another important producer operating in the Italian market, Hydrocar S.r.l., and subsidiaries.

These weren't random acquisitions—they were surgical strikes aimed at building a commanding position in power take-offs (PTOs), devices that transfer power from a vehicle's engine to auxiliary equipment. PTOs are essential components in work trucks, construction vehicles, and agricultural machinery—a fragmented market where consolidation could yield substantial synergies.

Muncie Power Products joined the Interpump Group in 1999, which has provided opportunities to expand our product offerings in North America and more easily distribute our products globally. The Muncie acquisition was particularly strategic. The agreement for the acquisition of Muncie Power Products Inc. is finalized, one of the leading manufacturers of power take-offs, hydraulic pumps and other hydraulic components in the US market. With this acquisition, IPH becomes the only manufacturer in the world operating in both European and American markets, and a global leader.

It was 1999 when Muncie Power joined the Interpump Group, a multinational operation based in Reggio Emelia, Italy, and created the largest power take-off manufacturing company in the world. In just two years following the IPO, Interpump had transformed itself from a European pump manufacturer to the world's largest producer of power take-offs—a remarkable demonstration of strategic vision and execution capability.

The strategic turning point came in the late 1990s, with the entry into the world of hydraulics: in just two years the Group would become the largest manufacturer of power take-offs in the world.

The hydraulics pivot illustrates several enduring principles of Interpump's strategy: enter markets adjacent to existing competencies, acquire market leaders in fragmented niches, consolidate to achieve scale advantages, and use acquisitions to achieve geographic expansion that would be prohibitively slow organically. These principles would guide the company for the next quarter century.

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V. Inflection Point #2: The 2005 Strategic Divestiture

Great compounders aren't just skilled at buying businesses—they know when to sell. In 2005, Interpump demonstrated the capital allocation discipline that separates good companies from exceptional ones by divesting its professional cleaning machines division.

In 2005 the branch relating to professional cleaning machines was sold following a repositioning in the most technological sectors. This wasn't a forced sale or a distressed exit—it was a proactive strategic decision to concentrate resources on higher-value opportunities.

April 2005: €293 million of sales with an EBITDA margin of around 10% in 2004. The cleaning machines business was substantial—nearly €300 million in revenues represented a meaningful portion of Interpump's overall sales at the time. But the business had characteristics that made it less attractive than the company's other operations: lower margins (10% EBITDA versus higher margins in hydraulics and water-jetting), more commoditized products, and less scope for the technical differentiation that was Interpump's competitive signature.

In a strategic move to focus on higher value-added sectors, Interpump Group divested its professional cleaning machines branch in 2005. This repositioning allowed the company to concentrate on technological advancements within the hydraulic components market, including cylinders, valves, and hoses.

In a move to reposition the Group focusing on applications with the highest added value, companies in the cleaning machinery and electric motor divisions were subsequently dismissed (respectively in 2005 and 2011).

The divestiture decision reveals Montipò's clear-eyed assessment of opportunity cost. Capital deployed in a 10% EBITDA margin business could generate higher returns in hydraulics and high-technology water-jetting applications. The proceeds from the sale provided acquisition currency for future deals in more attractive segments.

For investors, this episode is instructive. Many acquisition-oriented companies struggle to sell businesses, viewing divestitures as admissions of past mistakes. Interpump demonstrated that strategic portfolio pruning can enhance value creation by concentrating resources on the highest-return opportunities. The willingness to walk away from nearly €300 million in revenues to pursue better uses of capital requires conviction and discipline—qualities that have characterized Interpump's capital allocation consistently.

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VI. The 2008-2009 Global Financial Crisis: Opportunistic Expansion

When the global financial crisis struck, most industrial companies retrenched. Interpump went shopping.

Between 2008 and 2009, by means of acquisitions of companies or controlling stakes in companies operating in the production and trade of hydraulic cylinders and related components, Interpump Hydraulics expands its business networks to include: Oleodinamica Modenflex S.p.A.; H.S. Penta S.p.A., Contarini Leopoldo S.r.l., Cover S.r.l. and Oleodinamica Panni S.r.l.

The timing was counter-intuitive but strategically brilliant. In 2008 and 2009, credit markets had seized up, private equity buyers had retreated, and valuations for industrial assets had collapsed. For a well-capitalized company with a patient owner, this represented an extraordinary buying opportunity.

The Interpump stock reached its all-time low of €1.70 on March 20, 2009—a moment of maximum pessimism that the company exploited by acquiring distressed but fundamentally sound businesses at depressed valuations. The acquisitions during this period focused on hydraulic cylinders—essential components that extended Interpump's hydraulics portfolio into new product categories.

The crisis-era acquisitions demonstrated several key aspects of Interpump's approach. First, the company maintained a fortress balance sheet that allowed it to be opportunistic when others were defensive. Second, management had the emotional discipline to buy when fear dominated markets. Third, the company focused on acquiring quality assets at distressed prices rather than trophy assets at market peaks.

We can absolutely recall 2009, 2020 and 2024 as the annual rebillies of our group in terms of organic sales performance. And exactly in these years, we were able to maximize cash flow. Having demonstrated an inverse correlation between sales momentum and free cash flow generation, a sort of natural hedging.

This observation from company management reveals a profound insight about Interpump's business model. During downturns, working capital releases cash even as profits decline. This counter-cyclical cash flow pattern enables aggressive acquisition activity precisely when opportunities are most attractive—a structural advantage that has allowed Interpump to compound through multiple economic cycles.

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VII. Building the Hydraulics Empire: 2010-2013

The post-crisis years saw Interpump accelerate its transformation into a comprehensive hydraulics platform. Having survived the financial crisis and accumulated valuable cylinder assets at distressed prices, the company entered a period of aggressive geographic and product expansion.

In line with the organic growth strategy and with the aim of creating a real international industrial hub with a world leadership role, the Group acquires Mega Pacific Pty Ltd (Australia) and Mega Pacific NZ Pty Ltd (New Zealand), gaining a strong presence in the territory with a total of 11 branches.

The Australia/New Zealand acquisitions represented Interpump's push into the Asia-Pacific region, a geography the company had underweighted relative to its European and North American presence. The agricultural and mining equipment sectors in these markets created natural demand for Interpump's hydraulic components.

In 2011 Interpump merges with Takarada Indústria and Comércio Ltda, the main producer of power take-offs in Brazil. South America, with its vast agricultural sector and growing construction industry, represented another geographic growth vector. The Takarada acquisition provided Interpump with local manufacturing capacity and distribution networks in Brazil—essential infrastructure for capturing the region's growth.

Interpump's growth in the hydraulic valve and distributor sector began in 2012, with the acquisition of Italian companies M.T.C. and Galtech. It continued the following year as Italian company Hydrocontrol joined the Group, resulting in Interpump's international expansion in the sector thanks to the industrial and commercial presence in China, India and the United States of the newly acquired company.

The valve and distributor acquisitions were strategically significant. Hydraulic valves are the "brains" of hydraulic systems—they control fluid flow, direction, and pressure. By adding valves to its component portfolio (which already included pumps, cylinders, and PTOs), Interpump moved closer to offering complete hydraulic systems rather than individual components.

During this period, Interpump's sales more than doubled compared to the 2010-2015 period, reflecting both acquisition contributions and organic growth as global industrial production recovered. The company's multi-pronged strategy—geographic expansion, product line extension, and continued acquisition activity—was generating visible results.

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VIII. Inflection Point #3: The Walvoil Acquisition - 2014

Some acquisitions are additive; others are transformative. The 2014 acquisition of Walvoil falls firmly in the transformative category.

In 2014, the acquisition of Walvoil marked a turning point, allowing the Group to become a global leader in the sector and further expand its international presence in this operating segment.

Interpump pagherà un prezzo previsionale di 100 milioni di euro—Interpump paid approximately €100 million for Walvoil, a significant transaction that would reshape the company's competitive position. Walvoil a fine 2014 realizzerà un fatturato consolidato di circa 140 milioni, con la previsione di un Ebitda consolidato intorno ai 19 milioni di euro—Walvoil was expected to generate consolidated revenues of approximately €140 million with EBITDA around €19 million (a 13.6% margin).

Walvoil is one of the major international players in the production and commercialization of hydraulic valves and distributors. The acquisition's strategic importance extended beyond the raw financials. Walvoil brought sophisticated engineering capabilities in hydraulic valves—components that controlled the behavior of hydraulic systems across agriculture, construction, and industrial applications.

Interpump considers the acquisition of Walvoil "of extraordinary strategic importance" because it positions Interpump among the most important international leaders in the segment of hydraulic distributors, a strategic component in industrial hydraulic circuits; strengthens the presence in the sector of agricultural applications; consolidates and expands its own presence on international markets thanks to Walvoil's productive and commercial activities; and enhances synergistic potential with the activities of Interpump's Oil sector, since Walvoil has production companies in USA, India, China, Brazil, South Korea and commercial activities in France and Australia.

Since 2015, Walvoil has been representing Interpump Group's Valves Division by merging both the experience and products of Walvoil, Hydrocontrol, and Galtech. Among the leading manufacturers of integrated hydraulic products, electronics, and complete mechatronics systems, Walvoil continues to propel the future of motion power by working closely with its customers and partners from different sectors and markets.

The Walvoil acquisition transformed Interpump from a component manufacturer into a systems integrator. Customers seeking complete hydraulic solutions—OEMs building agricultural equipment, construction machinery, or industrial vehicles—could increasingly source multiple components from Interpump, simplifying their supply chains and deepening their commercial relationships with the company.

Since 2015 Walvoil has been representing the Interpump Group's Valves Division merging both the experiences and Walvoil, Hydrocontrol and Galtech brands. Among the main manufacturers of integrated products, electronics and complete mechatronics systems, Walvoil keeps on projecting the future of motion in close touch with its customers and its partners from different sectors and markets.

Why valves matter: they're the highest-complexity, highest-margin components in many hydraulic systems. The electronics and software content in modern hydraulic valves creates stickier customer relationships than commodity components like hoses or fittings. By acquiring leading positions in valves, Interpump positioned itself for the increasing electronification of hydraulic systems—a mega-trend that continues to reshape the industry.

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IX. Diversification into Adjacent Verticals: 2015-2019

Following the transformative Walvoil deal, Interpump continued its expansion into adjacent markets that leveraged its core competencies while opening new growth vectors.

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Flow Handling / Food & Pharmaceutical Segment

Interpump first entered the segment in 2015 through the acquisition of Bertoli, an Italian company specialised in the production of high-pressure homogenizers, whose functioning is based on a piston pump. The Bertoli acquisition represented a natural extension of Interpump's pump technology into a new application space—food processing and pharmaceutical manufacturing.

High-pressure homogenizers are essential in dairy processing (homogenizing milk), pharmaceutical production, and cosmetics manufacturing. The technology shares DNA with Interpump's water-jetting pumps but addresses entirely different end markets with higher margin profiles and more demanding quality requirements.

Then in 2017, Spanish company Inoxpa joined the Group, followed by another Italian company, Mariotti & Pecini: these two acquisitions allowed the Group, on the one hand, to expand abroad and, on the other, to significantly expand its product range with valves, tanks, rotary lobe pumps, mixers and agitators; all extremely high-quality products capable of meeting the stringent requirements of the food, cosmetic and pharmaceutical industries.

Fulvio Montipò, founder of Interpump in 1977 and current President and CEO, commented: "this acquisition synergically widens our opportunity horizon in the food, pharma and cosmetics market." The Inoxpa acquisition was particularly significant—it provided Interpump with a comprehensive platform in flow handling for hygienic applications.

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Power Transmission Segment

Interpump made its first move in the sector with the acquisition – in September 2019 – of Reggiana Riduttori, an Italian company and global leader in the production of gearboxes with a range of products covering from 1,200 up to 10,000,000 Nm of maximum torque.

Interpump Group S.p.A. (BIT:IP) signs a binding agreement to acquire Reggiana Riduttori s.r.l. for an enterprise value of approximately €130 million on September 23, 2019. Under the terms of the transaction, Interpump Group will transfer 3.8 million ordinary shares from its own portfolio plus a cash balance.

The Reggiana Riduttori acquisition opened an entirely new business segment—power transmission. Gearboxes are essential components that convert motor output into usable torque for various applications. The acquisition gave Interpump a leading position in heavy-duty planetary gearboxes used in mining, construction, marine, and industrial applications.

A few months later, Transtecno joined the Group which, with gearmotors with torque up to 3,500 Nm, perfectly complemented the offer.

First and foremost, the partnership with Reggiana Riduttori, another solid gear motor company in the Emilia region, and part of the Interpump Group Power Transmissions Division since 2019.

Transtecno and Reggiana Riduttori were selected and acquired by Interpump Group to create the Group's Power Transmissions Division. The combination of Reggiana Riduttori (heavy-duty planetary gearboxes) and Transtecno (smaller gearmotors) created a comprehensive power transmission offering spanning a wide range of torque requirements.

These diversification moves demonstrate Interpump's evolving strategy: from single-product niche dominance to multi-segment industrial platform. Each new vertical leveraged existing competencies (precision manufacturing, fluid dynamics, customer relationships with OEMs) while opening new addressable markets and reducing cyclical exposure through diversification.

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X. Inflection Point #4: White Drive Acquisition - 2021

If Walvoil transformed Interpump's competitive position in valves, the 2021 acquisition of White Drive Motors & Steering transformed its position in hydraulic motors—completing the company's evolution into a comprehensive hydraulic systems provider.

The closing activities related to the acquisition of White Drive by the Interpump Group ended on Friday 1 October. As announced on June 1, during the signing of a binding agreement for the purchase of the White Drive Motors & Steering business unit from the Danfoss Group, at the moment the acquisition includes three production sites: Hopkinsville (Kentucky, USA), Parchim (Germany) and Wroclaw (Poland).

"This acquisition, the most significant in Interpump's history, will expand our product offering to include orbital motors and steering systems, reinforcing our role as a global player in hydraulics" - Fulvio Montipò.

The scale of the White Drive acquisition was unprecedented for Interpump. The seller communicated that EBITDA, measured at the closing date and extended to 12 months, would amount to 53 million euro, compared to the 45 million euro originally projected. For this reason the price for the operation, paid in cash today, corresponds to a total enterprise value of 278 million euro.

Total sales expected for the full year 2021 should be slightly above € 200 million. White Drive was generating approximately €200 million in revenues with an EBITDA margin around 22%—a substantial business that would meaningfully increase Interpump's scale and product breadth.

The acquisition arose from an unusual situation in the hydraulics industry. According to the Dane Company "Since Danfoss announced the acquisition of Eaton Hydraulics last year, the transaction has been subject to the usual closing conditions and regulatory approvals. Danfoss is now establishing and preparing to sell a business unit – White Drive Motors & Steering – in an effort to obtain regulatory approvals from the European Commission and the U.S. Department of Justice."

Danfoss's acquisition of Eaton's hydraulics business created antitrust concerns that required divestiture of White Drive. Interpump was positioned as the ideal buyer—large enough to absorb the business, strategically motivated to acquire it, and operationally capable of integrating it successfully.

Operating globally for over 50 years, White Drive Motors & Steering develops innovative, durable, high-performing, and efficient hydraulic products across many market sectors and for the most challenging applications across the globe. With a commitment to quality, White Drive continues to invest in its engineering excellence and application know-how with teams who care and are easy to do business with to meet customers' needs.

The White Drive acquisition completed a critical gap in Interpump's hydraulics offering. The company now offered pumps, valves, cylinders, PTOs, gearboxes, and motors—essentially every major component in a mobile hydraulic system. Together, these five companies serve nearly 30 industries, including agriculture, road building, renewable energy, forestry, and much more.

For customers, this breadth creates compelling value: simplified supply chains, coordinated technical support, and the assurance of working with a global partner capable of supporting operations worldwide. For Interpump, it creates competitive differentiation against smaller specialists who can only offer pieces of the hydraulic puzzle.

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XI. The M&A Playbook: Interpump's Secret Sauce

Having traced Interpump's major acquisitions, it's worth stepping back to examine the systematic approach that has made M&A a genuine competitive advantage rather than a series of ad hoc transactions.

Acquisitions are a fundamental tool for implementing the Group strategy, which is aimed at sector, geographical and product diversification with a view to balancing its business in a way that mitigates industrial risk and allows the pursuit of dimensional growth and maintenance of profitability standards.

Its business model is centered on acquisitions (more than 40 companies acquired since its 1996 IPO) and the development of facilities all around the World. In fact Interpump's multiyear impressive growth has been achieved mainly through acquisitions of smaller companies (40 since its IPO), which usually increase notably their margins after the buyout: around 2/3 of the parent company's growth is not organic.

This statistic is remarkable: approximately two-thirds of Interpump's growth has come through acquisitions. Yet unlike many serial acquirers that destroy value through integration failures or overpayment, Interpump has consistently created value for shareholders. The question is: how?

Target Selection: "Niche Within Niche" Strategy

Interpump systematically targets leaders in micro-segments rather than large, broadly competitive businesses. A company leading the global market for a specific type of hydraulic cylinder may have €20-50 million in revenues—too small to interest major strategic buyers or private equity, but perfect for Interpump's model.

These niche leaders share common characteristics: proprietary engineering know-how, established customer relationships, and strong market positions that protect margins. They often lack the management bandwidth, capital resources, or global distribution to realize their full potential—creating opportunities for value creation post-acquisition.

Integration Model: Preserve and Enhance

The Group has a history of successful acquisitions in both divisions, and features an integration model that preserves the structure, brand and business of acquired companies while helping them to grow in size and profitability.

Unlike acquirers who impose rigid integration playbooks, Interpump preserves acquired companies' brands, management teams, and organizational identities. The headquarters in Sant'Ilario d'Enza doesn't impose cookie-cutter solutions on businesses that have succeeded through distinct approaches to their markets.

What Interpump does provide: access to global distribution networks, shared services in areas like procurement and finance, and capital for growth investments that family-owned businesses often can't self-fund. The result is a decentralized federation of specialists rather than a centralized bureaucracy.

Margin Enhancement

Acquired companies typically see meaningful margin improvement under Interpump's ownership. The mechanisms include:

• Procurement synergies: Interpump's purchasing scale reduces input costs for acquired companies
• Operational best practices: Shared manufacturing techniques and quality systems
• Revenue synergies: Cross-selling through Interpump's global distribution network
• Capital investment: Funding for equipment, facilities, and technology that cash-constrained family businesses often defer

Disciplined Pricing

Interpump's track record reflects disciplined valuation rather than winner's curse dynamics. The company has repeatedly demonstrated willingness to walk away from overpriced transactions, preserving capital for better opportunities. The counter-cyclical nature of Interpump's acquisition activity—buying more aggressively during downturns when valuations are depressed—reflects this discipline in action.

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XII. Recent Era: 2022-2025 & Current State

The years following the White Drive acquisition have tested Interpump through post-COVID normalization, supply chain disruptions, and cyclical headwinds in key end markets.

In 2021, DZ Trasmissioni was acquired, followed by Berma and finally, in 2022, Draintech, all niche companies of the highest quality which have made it possible to expand the Group's product range. Thanks to the acquisition of DZ and Draintech, today Interpump is also present in the market of right-angle gear drivers and screw jacks.

In 2023, the Group took another major step forward with the acquisition of Italian company I.Mec and New Zealand company Waikato: the former specialising in the manufacture of mechanical screens and the latter leader in the New Zealand and Australian mechanized milking market.

The company's proactive acquisition strategy was evident in 2024, with the completion of six key acquisitions. These included PP China Co., Ltd. and YRP Shanghai Flow Technology Co., Ltd., which bolstered its presence in China's plant engineering sector. Alltube Engineering Ltd. was acquired to enhance rigid pipe fabrication capabilities in the UK.

On 3 June 2024 the Interpump Group announced the acquisition of 100% of the capital of Alfa Valvole S.r.l. The Alfa Valvole acquisition expanded Interpump's valve offering with industrial ball valves from a company founded in 1971 with strong positions in high-end valve segments.

2024 Financial Performance

Revenues of € 2,078 million were 7.2% lower than in 2023, when they totaled € 2,240 million. Analysis by business sector shows that revenues in the Hydraulic Sector were 13.9% lower than in 2023, while those in the Water-Jetting Sector were 10.8% higher.

The divergent performance between segments reflects end-market dynamics. The hydraulics business faced headwinds from: - Prolonged weakness in agricultural equipment (farmers deferring purchases amid commodity price volatility) - Construction sector slowdown in Europe and China - Inventory destocking by OEM customers who had over-ordered during supply chain disruptions

EBITDA was € 456.6 million (22.0% of revenues). Despite the revenue decline, Interpump maintained its 22% EBITDA margin target—a testament to operational flexibility and cost discipline.

Interpump Group SpA achieved a record free cash flow of EUR 205 million, demonstrating strong cash generation capabilities even in adverse market conditions. The company maintained a resilient EBITDA margin of 22% despite a 9% organic sales drop.

Despite pursuing a major investment plan, the Group generated free cash flow of € 205.1 million in 2024. This record cash flow during a challenging year validated management's point about "natural hedging"—the counter-cyclical relationship between sales growth and cash generation that provides acquisition firepower precisely when opportunities are most attractive.

The company also reduced its net debt to €409 million from €486 million at the end of 2023. With net debt to EBITDA of just 0.8x, Interpump maintains a conservative balance sheet that provides substantial capacity for future acquisitions.

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XIII. Business Model Deep Dive

Understanding Interpump requires disaggregating its diverse businesses and examining the economic characteristics of each segment.

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Segment Breakdown

Hydraulics Sector (~73% of net sales)

Hydraulics: around 70% of Group sales, EBITDA margin around 20%. Wide range of components for mobile and non-mobile hydraulics: PTOs, cylinders, gear pumps, valves, hoses, fittings.

The hydraulics division encompasses multiple product families:

• Power Take-Offs (PTOs): World leadership position; PTOs transfer power from vehicle engines to auxiliary equipment
• Hydraulic Cylinders: Diverse applications from construction equipment to waste collection vehicles
• Valves & DCVs: Strategic growth area following Walvoil acquisition; includes directional control valves, electronics, and mechatronics
• Orbital Motors & Steering: Added through White Drive acquisition; essential for mobile equipment
• Hoses & Fittings: High-volume, lower-margin components with strong aftermarket content
• Gearboxes: Power transmission products for heavy-duty applications

Central to its success is the Hydraulic Sector, which includes the production of hydraulic components and systems critical for industries as diverse as agriculture, construction, and transportation.

Water-Jetting Sector (~27% of net sales)

Water Jetting: around 30% of Group sales and EBITDA margin above 26%. High-pressure plunger piston pumps. Additional businesses: flow processing components for food&beverage, cosmetics and pharmaceutical components.

The water-jetting division represents Interpump's founding business plus strategic extensions:

• High & Ultra-High-Pressure Pumps: Core product line; global leadership position
• Flow Handling/Food & Pharma: Homogenizers, mixers, valves, and tanks for hygienic applications

Meanwhile, the Water Jetting Sector, once its sole focus, still thrives, providing equipment used in industrial cleaning, surface preparation, and precision cutting.

The water-jetting segment carries higher margins (above 26% EBITDA) due to: - Less commoditized products with higher engineering content - Stronger aftermarket revenue (spare parts, accessories) - Higher barriers to entry in ultra-high-pressure applications

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Geographic Distribution

Net sales are distributed geographically as follows: Italy (16.1%), Europe (35.5%), North America (28.9%), Asia/Pacific (11%) and other (8.5%).

The geographic mix reflects deliberate strategy. Italy remains important as a manufacturing hub and source of engineering talent, but export markets—particularly North America and Europe—drive the majority of revenues. The relatively smaller Asia-Pacific exposure represents both a risk (underweight in the world's fastest-growing region) and an opportunity (room for expansion).

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Manufacturing Footprint

The company owns production facilities in Italy, the U.S., Germany, China, India, Brazil, Bulgaria, Romania, and South Korea. This global manufacturing presence provides several advantages:

• Proximity to customers reduces shipping costs and delivery times
• Local production hedges against currency volatility and trade policy risks
• Regional manufacturing capabilities make Interpump more attractive as a supplier partner for global OEMs

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End-Market Diversification

Together, these five companies serve nearly 30 industries, including agriculture, road building, renewable energy, forestry, and much more.

This extreme end-market diversification is both strength and complexity. Agriculture cycles differently than construction; material handling follows distinct patterns from forestry. The diversification provides natural hedging but requires management bandwidth to track disparate markets.

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XIV. Competitive Landscape & Strategic Positioning

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The Hydraulics Competitive Terrain

The competitive landscape of the hydraulic piston pumps market is moderately consolidated with several prominent global players and numerous regional manufacturers. Key market participants include Parker Hannifin Corporation, Bosch Rexroth AG, Eaton Corporation, Danfoss Group, Kawasaki Precision Machinery Ltd., and Linde Hydraulics.

Interpump competes against industrial titans with vastly greater scale. Parker Hannifin generates over $15 billion in annual revenues; Bosch Rexroth is a €7.5 billion subsidiary of the Bosch conglomerate. How does a €2 billion Italian company compete?

Parker Hannifin is a Fortune 250 global leader in motion and control technologies. For more than a century the company has been enabling engineering breakthroughs that lead to a better tomorrow.

Interpump's Competitive Advantages

1. Niche Focus: While competitors spread resources across aerospace, industrial automation, and other diversified businesses, Interpump concentrates exclusively on fluid power and related applications.

2. Decentralized Operations: Interpump's federated structure allows rapid decision-making and customer responsiveness that centralized competitors struggle to match.

3. Founder-Led Culture: With Fulvio Montipò still guiding strategy, Interpump maintains the long-term orientation that publicly traded competitors with professional managers often sacrifice for quarterly performance.

4. Acquisition Expertise: Interpump has developed genuine M&A capabilities that larger competitors—who typically make acquisitions through corporate development departments—cannot replicate.

5. Niche Leadership: In specific segments (high-pressure pumps, PTOs), Interpump holds #1 global positions that provide pricing power and customer stickiness.

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Porter's Five Forces Analysis

Threat of New Entrants: Low to Moderate - High technical barriers in specialized hydraulic components - Established customer relationships create switching costs - Capital requirements for manufacturing are significant - However, Asian competitors could emerge in commoditized segments

Bargaining Power of Suppliers: Low to Moderate - Multiple sourcing options for most components - Interpump's scale provides purchasing leverage - Some specialty materials (ceramics, specific alloys) have limited suppliers

Bargaining Power of Buyers: Moderate - Large OEM customers have significant purchasing power - Interpump's niche positions provide some pricing protection - Aftermarket sales (spare parts) face less price pressure than OEM sales

Threat of Substitutes: Low - Hydraulic systems have limited substitutes for heavy-duty applications - Electric actuators gaining share in some applications but face performance limitations - Long-term electrification trend requires monitoring

Industry Rivalry: Moderate to High - Fragmented market creates competitive pressure in commoditized segments - Premium segments where Interpump focuses see more rational competition - Global competitors compete intensely for large OEM contracts

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Hamilton Helmer's 7 Powers Analysis

Process Power: Interpump has developed proprietary manufacturing processes (ceramic piston technology, specialized machining) that competitors cannot easily replicate.

Scale Economies: Meaningful in procurement and manufacturing; Interpump benefits from spreading fixed costs across larger volumes than smaller competitors.

Network Economies: Limited direct network effects, but Interpump's global distribution network creates customer value that grows with scope.

Counter-Positioning: Interpump's decentralized, acquisition-focused model is difficult for large centralized competitors to adopt without disrupting existing structures.

Switching Costs: Moderate; customers incur costs when changing suppliers due to engineering specifications, qualification requirements, and supply chain integration.

Branding: Strong in niche segments where Interpump brands (Walvoil, Muncie Power, etc.) are recognized quality leaders.

Cornered Resource: Access to a pipeline of acquisition targets developed through decades of relationship-building in fragmented markets.

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XV. Bull & Bear Cases for Investors

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The Bull Case

1. Continued M&A Opportunity The hydraulics industry remains fragmented with hundreds of family-owned specialists who lack succession plans or capital for growth. Interpump's track record and reputation make it a preferred acquirer for quality targets. Management estimates a pipeline of potential acquisitions that could sustain growth for years.

2. Margin Expansion Potential In 2024, notwithstanding an organic sales drop of 9%, we were able to maintain 22% EBITDA margin and protect our profitability. In these 6 years characterized by a business volatility we never faced in our history, we consistently succeeded in minimizing the impact of this volatility, having confirmed a profitability range between 22% and 23.6%.

Interpump has demonstrated margin resilience during downturns. As hydraulics revenue recovers from cyclical lows, operating leverage should expand margins toward the upper end of historical ranges.

3. Electrification as Opportunity Contrary to fears that electric vehicles will eliminate hydraulic systems, electrification actually increases demand for sophisticated hydraulic components in many applications. Electric construction equipment still requires hydraulic systems; agricultural equipment is adopting more electronics-intensive hydraulic controls. Interpump's Walvoil division is positioned for this transition.

4. Geographic Expansion Interpump remains underweight in Asia-Pacific relative to the region's economic importance. Successful expansion in China and India could provide a meaningful growth runway.

5. Cash Generation Record free cash flow during a challenging year demonstrates the business model's durability. Counter-cyclical cash generation provides firepower for acquisitions precisely when valuations are most attractive.

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The Bear Case

1. Cyclical Exposure Hydraulics demand correlates strongly with capital goods investment cycles. Agriculture, construction, and industrial machinery markets can decline sharply during recessions. The 2024 experience—with hydraulics revenues down nearly 14%—illustrates this exposure.

2. Key Person Risk Founder of Interpump Group SpA, Fulvio Montipò is a businessperson who has been at the head of 10 different companies. Montipò has guided Interpump for nearly 50 years. Succession planning and management continuity represent material concerns for long-term investors.

3. Integration Risk With over 115 companies in the group, organizational complexity creates challenges. Future acquisitions might not integrate as successfully as historical deals, or management bandwidth could be stretched.

4. Chinese Competition Chinese hydraulics manufacturers are improving quality and expanding globally. While currently positioned in lower-value segments, competitive pressure could intensify in Interpump's markets.

5. Technology Disruption While electrification creates opportunities, fully electric systems could eventually replace hydraulics in some applications. Monitoring this transition is essential.

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XVI. Key Performance Indicators for Monitoring

For investors tracking Interpump, three KPIs merit particular attention:

1. Organic Revenue Growth Given that acquisitions dominate growth, isolating organic performance reveals the underlying health of existing businesses. Watch for: - Segment-level organic growth (hydraulics vs. water-jetting) - Geographic organic trends - End-market indicators in agriculture, construction, and industrial sectors

2. EBITDA Margin Second number, an EBITDA margin of 22%. Group profitability guideline is exactly this number, even if you probably associate it more to acquisitions, dilution than to organic development.

The 22% EBITDA margin target represents management's commitment to profitability discipline. Deviations above or below this level signal operating leverage (positive) or structural challenges (negative). Track: - Consolidated EBITDA margin - Segment margins (water-jetting should exceed 26%; hydraulics around 20%) - Acquired company margin progression

3. Free Cash Flow Conversion Cash generation validates reported profits and funds growth. Interpump's counter-cyclical cash flow pattern—stronger generation during downturns—provides acquisition firepower when opportunities are most attractive. Monitor: - FCF as percentage of net income - Working capital trends (should decline as share of sales over time) - CapEx intensity (currently normalizing after elevated investment period)

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XVII. Conclusion: The Compounding Machine

Interpump Group's nearly five-decade journey from a workshop in Sant'Ilario d'Enza to a €4 billion global industrial company offers lessons for investors seeking quality compounders.

First, technical innovation—even in mundane industrial applications—can create durable competitive advantages. Montipò's ceramic piston insight wasn't glamorous, but it established market leadership that persists forty-seven years later.

Second, disciplined M&A can be a genuine competitive advantage rather than a value-destroying distraction. Interpump's track record demonstrates that systematic acquisition capability—developed through decades of practice—creates compounding opportunities that organic growth alone cannot match.

Third, founder-led cultures matter. Montipò's continued presence provides strategic continuity and long-term orientation that professional managers at competitors often cannot replicate.

Fourth, capital allocation discipline separates compounders from value-destroyers. The 2005 cleaning machines divestiture, the counter-cyclical acquisition timing, and the conservative balance sheet all reflect disciplined capital deployment that maximizes long-term value.

Finally, diversification—by product, geography, and end-market—provides resilience that enables sustained compounding through inevitable industry cycles.

Sales: around 8% of growth, with only 5 years of decrease driven by strategic activities review or extraordinary external events. That 8% compound annual growth rate in sales since the 1996 IPO, maintained through the dot-com bust, the financial crisis, the European debt crisis, and the COVID pandemic, represents the essence of compounding: consistent execution across varied conditions.

For investors with patience and conviction, Interpump Group represents the kind of industrial compounder that rewards long-term holding—a €1,250 workshop that became a €4 billion empire, one ceramic piston and one niche acquisition at a time.