All posts by Gianfranco Puopolo

About Gianfranco Puopolo

Email: [email protected]
Tel: +39 02 760 13359
Gianfranco assists companies in complex transactions where he represents institutional investors, sellers or buyers. He represents Italian and foreign listed companies in acquisitions or reorganization of businesses. Highlights of his work include representing the leading Ukrainian conglomerate in the acquisition of steel mills in Italy and in other EU countries. Gianfranco assists insurance companies and financial institutions on corporate transactions and on the establishment of subsidiaries in Italy. Gianfranco sits on board of directors and advisory boards of companies investing in Italy. He appears as an expert in his field in major legal directories such as Chambers and Legal 500.

Investing in Italy

According to recent data regarding the Italian M&A market, the 2008 financial crisis is over. Compared to the previous year, the Italian M&A market registered a significant increase of deals having an aggregate value of approximately 49 million euro. Out of over 500 transactions completed in 2014, more than 37% of the deals were cross-board transactions while Italian companies targeted domestic companies as well as investments abroad.[1] Just to name a few of the deals that took place in 2014, worthy of mention are the acquisition of Indesit by Whirlpool and Grom – a local ice-cream business – by the Unilever Group while Italian investments abroad targeted, for example, Ciments Français by Italcementi and more than 240 mergers among Italian companies took place.

Foreign investors have always displayed a special interest towards the Italian market. Italy is a gateway to the European Union. Investing in Italy means acquiring the possibility of taking advantages of the single market, including the freedom of establishment or the freedom to provide services thus overcoming the barriers that Non-EU entities are likely to face in order to do business in the EU directly from their home country. As a member of the Monetary Union, Italy has a strong currency – the Euro – which has a significant impact on imports and exports and that is not subject to the loss of purchasing power, as may be the case for weaker currencies. Further, by investing in underdeveloped areas, such as Southern Italy, an entity may become eligible to apply for state grants and non-refundable facilities.

Moreover, it cannot be denied that Italian craftsmanship is without rivals and that Italy offers a combination of state-of-the-art technology and creativity that make Italian products unique worldwide. This is a rare blend that will be difficult to find elsewhere in Europe and the “Made in Italy” brand gives a product unquestionable added value.

The awakened interest in the Italian market and the reprise of acquisitions by foreign as well as Italian investors have been triggered by a variety of factors such as monetary policies enacted by the European Central Bank and recent reforms of the Italian labour market.

The quantitative easing plan approved by the ECB has injected a significant amount of cash into the market and the supply of liquidity to banks and credit institutes has promoted lending to enterprises. Businesses now find themselves having easy access to funds that they are willing to invest in new projects, whether in Italy or abroad.

Also, rigid labour laws that have always been of concern to foreign companies doing business in Italy have been mitigated by recent reforms enacted by the government headed by Prime Minister Matteo Renzi. The primary piece of labour legislation passed by the Renzi Government, known as the “Jobs Act”, has deeply reformed the Italian labour market.

While the Jobs Act in its entirety is still being implement, it provides for new types of employment contracts and has simplified the hiring and firing process, streamlining the entire employment relationship and making it easier to dismiss employees. With a view at promoting employment, the Jobs Act offers tax breaks to companies that hire personnel with permanent employment contract and has reorganized existing social shock-absorbers. Since the implementation of the Jobs Act, indicators show that the unemployment rate has gone down for the first time in years. Labour Unions, however, continue to be key players in employment negotiations processes and their role and influence should not be under estimated.

The Challenges of Investing in Italy

The reforms introduced by the Renzi Government accompanied by the BCE’s monetary policies have certainly generated greater stability in the overall Italian scenario. Nonetheless, there are still many challenges that foreign investors must address within the context of an M&A deal.

Depending on the specific field of business, investors may unexpectedly find themselves tangled in red tape and authorization proceedings that sometimes discourage investors coming from jurisdictions that do not impose the same degree of government involvement. In this respect it is noteworthy to point out that while EU nationals – whether individuals or corporations – usually benefit from the same treatment reserved to Italians, non-EU nationals may be required to meet certain criteria of eligibility in order to be enabled to do business in Italy, for example they may be required to establish an Italian subsidiary. Also, foreign clients often approach the Italian market with a certain degree of mistrust that follows the many commonplaces on Italy.

Foreign companies are often trapped in the meanders of Italian bureaucracy that Italian themselves have a hard time dealing with. Foreign investors that are used to streamline processes in their home countries will have to cope with more complex laws and sometimes unreasonable, albeit mandatory, courses of action.

What is Our Role

In the face of these challenges, in addition to providing highly professional and qualified legal services, our goal is to lead our clients through the various steps of any mandatory processes in order to overcome potential obstacles in completing a transaction, whether this obstacle consists in obtaining a license to operate a specific type of business or dealing with unions to renegotiate workers’ rights. We lead our clients through the red tape and explain to them the legal scenario within which they will operate. In this respect, we assist our clients by dealing directly with government officials and regulatory authorities with which we have established sound relations, and provided detailed guidelines on how to do business in Italy. We adopt a comprehensive approach that addresses all the potential issues related to an M&A transaction and specific type of business, from legal to tax to regulatory and suggest a range of solutions that respond to our clients’ business needs and objectives.

Thus, our job is to conduct our clients through the written and unwritten rules on doing business in Italy and we help create a sentiment of complicity between the client and the new business environment it is called to operate in.

Our team is composed of attorneys from different jurisdictions that are able to understand our clients’ cultural background and, hence, to mitigate the impact that doing business in Italy may imply.

Our lawyers’ solid legal training represents our primary asset that is complemented by their academic preparation and practical expertise in the various fields of law we operate in. Also, we work in our clients’ language: our lawyers are mother-tongue professionals that are qualified either in Italy and/or in their home countries. This allows us to understand our foreign clients’ specific needs and to establish a constant and professional relationship while building up a relationship of confidence with our clients.

[1] KPMG M&A Report 2014