M&A insights in Italy: Outlook for 2023

M&A activity in Italy was quite active during 2022, with even more Italian domestic and cross-border M&A transactions completed than during the pre-pandemic period. The financial resources pushed into the economy by the Italian government to mitigate the negative impacts of the pandemic aided in fueling this activity.

Furthermore, Italian companies have shown willingness and interest in investing in industries related to digital transformation and environmental sustainability.

Private equity was crucial, supplying financing for at least one-third of all Italian M&A transactions that closed last year. Indeed, private equity firms aided Italian companies’ expansion goals by providing funding for new corporate acquisitions and the deployment of business models to expand the geographical distribution of Italian products and services. Furthermore, as a result of their 2022 experiences, Italian companies are likely to become even more accessible to private equity investors who bring new financial resources and know-how.

The highest performing industries in Italy have been industrial manufacturing and automotive (+18% in volume vs 2021), and consumer markets (+71% in value vs 2021).

Looking ahead to 2023, European governments are aggressively seeking to diversify energy sources in order to reduce reliance on Russian gas. As a result, increased M&A activity in the energy sector is to be expected. Another reason to anticipate a surge in M&A activity in the energy sector in 2023 is a greater knowledge of, and commitment to, sustainability. Companies will continue to seek green methods, diversify energy sources, and reduce supply prices.

Additionally, another key role within the Italian M&A market is represented by venture capital investments in Italian technology start-up companies. In analyzing data, it is clear that the start-up scene has played a prominent role in the last two years in the M&A market; post pandemic but especially during 2022, the innovation sector got a big boost thanks to the many start-ups that were incorporated and the increasing number of investments in these technology start-ups. Despite being one of the countries in the EU with the highest GDP, Italy is still growing in venture capital investments.

Sectors that are likely to attract interest from private equity investors in 2023 include:

1.Technology,

2.Luxury brands,

3.Pharmaceuticals, and life sciences (including healthcare and biotech),

4.Agribusiness and food.

The key themes for M&A activities in Italy in 2023 will be:

1.Cash flow & profitability,

2.Sensitivity on inflationary and currency scenarios,

3.ESG and data analytics,

4.Synergy and post deal matters.

In conclusion, despite all the risks that have been seen globally for M&As in the past two years, such activities are still growing, benefiting from the rebound effect resulting from the end of the pandemic. In this respect, Italy, which until 2019 was considered lagging far behind when compared with other European countries in this respect, can benefit from this period by creating a trustworthy environment for tech companies and investors.

D’Andrea & Partners Legal Counsel will continue to provide information on M&As in Italy. If you need any assistance please feel free to contact us at: info@dandreapartners.com