Business combinations: courageous captains sought- Corriere.it

Lor we could compare it to the tip of the iceberg. The movement of M&A, mergers and mergers obviously affects a small part of the business system, but investigating trends and evaluating their quantities is important because it shows us which path the emerging companies are following and which therefore see more clearly than the others. what is moving around them. In this regard, the study that Adacta and Equita have put down in recent days is useful, paying special attention to the Northeast (which in terms of trends is always a strong indicator). Adacta is based in Vicenza and operates in consultancy, while Equita is the main Italian independent investment bank and the two companies have just defined a partnership agreement intended to support the Triveneto entrepreneurial fabric.

Who goes, who comes …

But – and this is the most intriguing question – is the M&A movement bringing value to the territory or is it merely extracting it? To answer Paolo Masotti, CEO of Adacta Advisory, starts from the issue 572, or the operations carried out in the Northeast in the period from 2019 to the first half of 2022 and which obviously discounts the Coronavirus break. Well that 572, which in itself certifies the vitality of the system and widespread protagonism, can be broken down into three sections: the first Masotti defines it as “North East that aggregates”, the second “sale to industrial groups”, the third “first acquisition”. In quantitative terms, the three sections are worth respectively 41%, 31% and 27%. Let’s start from the second section the one concerning the transfers tout court (179 cases) to companies or industrial groups. Among the companies in question are the Trivellato Auto passed to Autotorino, Enoitalia of Verona sold to Italian Wine Brands, Trudi passed to Giochi Preziosi and the Business Unit Consultancy of H-Farm sold to Jakala. Masotti explains: «In these cases the Northeast realities are integrated into larger groups, often of an international matrix. And it is clear that this process is accompanied by a loss of autonomy, the head office of the buyers is outside the Northeast and sooner or later the heads of the companies that have changed hands are destined to move. Part of the wealth goes away even if production remains in our regions ». The third section concerns the “first acquisition”, an operation that at a later time – which we cannot foresee – can lead to the target company becoming a pole of further aggregations or to a second resale to another financial entity or industrial that it is. Over the three-year period we are talking about 157 operations carried out by 130 different subjects. The list of the latter is opened by 21 Investimenti and continues with Alcedo, Clessidra, Palladio and Investindustrial. There is therefore mainly Venetian and Italian finance (the first foreigner is in tenth place) that takes the deal home and reserves the right to better understand the potential of the company (and subsequent moves). In any case, this is an unprecedented scenario in the finance-industry relationship in Veneto, where in the past years the field was dominated by the “unusual” practices of cooperative banks with their customers. But now we come to the most interesting section: the 236 cases of Northeast which aggregates or the disavowal on the field of the forces that also come from regional politics to keep intact the museology of the small-is-beautiful.

And who grows up

Just under a third of these cases (69 to be precise) – says Masotti – are represented by aggregations led by private equity funds. And the names refer to the Fedrigoni paper mills: as many as 8 consolidation operations have brought the group from a turnover of 600 million to 1.6 billion. To Morato (bakery) which increased from 60 to 300 million in revenues by virtue of 6 operations. Similar stories are those of Lynx Group (5 operations), Eurochef (6) and Specchiasol and Forno di Asolo with 4 consolidations. The leading funds are Bain Capital, Aliante, Fondo Strategico Italiano, Alcedo and Bc Partners. Masotti, however, invites us to look with particular attention to the 167 cases of aggregations led by other industrial subjects because this is the most interesting trend. «Even if these are aggregations of realities with limited turnover, they measure the will / leadership capacity of Veneto entrepreneurs. There are at least 1,200 companies that can be protagonists of this movement and the pace of operations remains low so far. In fact, we can say that in the three-year period examined there were 130 entrepreneurs in the area capable of throwing their hearts over the obstacle and giving life to those 167 operations mentioned above ». A certainly positive phenomenon that in many cases leads to the creation of subjects of European caliber but, according to Masotti, much more can be done. “There are conditions in Veneto to be more ambitious, to get out of the comfort zone and express a new generation of courageous captains”.

Good finance

If we leave the Northeast for a moment and analyze national M&A trends, we record in the notebook the decline of 2020, the positive rebound of 2021 with over a thousand operations announced in the year and “the signs of resilience of 2022”. “There is a gradual increase in larger transactions, in fact the number of deals with a value exceeding 300 million has progressively increased”, explains Carlo Andrea Volpe, co-head investment banking of Equita. And he adds at least five reasons why M&A will continue to be a pillar of future strategies: a) “secular” trends linked to sectors such as digital transformation, energy and healthcare; b) the shortening of value chains; c) the search for greater solidity and geographical diversification; d) generational change; e) the push to “crystallize value” in some businesses of large groups. Put this way, the famous question of the right size of companies becomes a metaphor either for a more radical change or for the opportunities that the Italian system must be able to seize. “Unfortunately, the culture of aggregation is still limited here. Either you sell everything or you buy. Two entrepreneurs who join their efforts and continue the journey in sharing it is difficult to find them. And if we analyze the average free float of listed companies, we find the same theme. It is the difficulty of sharing and a certain skepticism on the rules of governance, ”says Volpe.

A bridge with the market

Consequently, the engine to act on size rather than the courage of entrepreneurs – who invoked Masotti – becomes good finance. «The reason for our collaboration with Adacta is precisely to build a bridge between companies and the capital market» adds Volpe. There is no shortage of subjects and they range from private equity in the strict sense to family offices and all forms of institutional investors. It is clear that if we talk about the Northeast we cannot fail to underline the elements of change taking place. Historically, local entrepreneurship has remained entangled in a bank-centered and at the same time autarchic system, today disintermediation is linked – or at least it is hoped that it is – also to a surplus of internationalization. «With the bowls stopped, 50% of the operations are domestic. We are more prey than hunters and the numbers of the M&A market say so. Then news like that of Ariston who buys in Germany comes out and we are all very happy ».