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Law Firm Principal on Why the Pandemic Didn't Slow Down Robust M&A Sector in Italy

By Alexis Christoforous




Corporate deal making remains “robust” throughout the pandemic as companies look for opportunities to grow and put their hordes of cash to work.


“M&A activity has been literally booming,” Filippo Modulo, managing partner at the Italian law firm Chiomenti, told The Voice of Business. “We have seen a huge increase of interest from foreign buyers into our market.”


Chiomenti was one of the legal advisors for a recent blockbuster deal in the travel retail market.


Switzerland’s Dufry, which operates more than 2,300 duty-free shops in 66 countries, agreed to buy Autogrill, the operator of restaurants in airports, motorways, and railway stations from the Italian billionaire Benetton family. The deal creates a new $6 billion player in the travel retail market.


While M&A activity is strong, Modulo admits it’s not across all industries. He said while deals like Autogrill are still happening, other sectors of M&A, especially those requiring bank financing, have slowed amid high inflation and rising interest rates globally.


Modulo said areas where he is seeing a lot of dealmaking are pharmaceuticals, oil infrastructure, IT and tech, as well as what he called “classic industries,” such as mechanics and automotive.


“Through the pandemic, some sectors literally had to grow and had space to grow. What we've seen in Italy is that there has been a recognition of the quality of the assets we have, and the companies we have in many, many sectors able to face the difficulties of the pandemic,” Modulo said. “We also have companies whose valuations were aligned with the expectations of investors. So it's a good time to buy.”


While some companies have been forced to consolidate because of business conditions, Modulo said most of the M&A activity his firm is advising has been born out of companies’ needs to grow and expand into new markets.


Founded in 1948, and headquartered in Rome and Milan, Chiomenti also has offices in New York, Beijing, Brussels and London.


“What we see is that when US players, but also other foreign employers play the [Italian] market, they get very strong results. That's why they come back,” Modulo said.


He advises foreign companies entering the Italian market to go in with eyes-wide open. “They should know how to play locally, in the sense that they should know how to apply their procedures, their habits, but through an Italian lens,” he recommended.


He said it’s important to have a team of experts ready to advise the transaction. “In the past, you just had maybe one key man, a key lawyer or a key banker, able to explain everything and face and manage whatever issues you might have had in your investments,” he said. “Nowadays, this is no longer the case. You need a combination of capabilities and expertise. The key point is to have a number of colleagues that have the same principles, the same quality, the same commitment, and they're working together to provide the combined service to the client.”


Despite geopolitical and economic uncertainty, Modulo is optimistic about the future. “What I see for the time being is that business is continuing. We see new investors coming in. We see new important transactions being announced, even in these challenging days,” he said. “Now, the war in Ukraine is a known factor, and we see banks are still financing. US players are still coming to Italy to invest here.”