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Where is Italian M&A and private equity activity now?

Business cycles are guaranteed, but few anticipated the global recession precipitated by a viral pandemic that sent the world into lockdown. Italy was the first country in Europe to be hit by the pandemic and has been on of the worst affected. Consequently, buyout activity and M&A more broadly took a significant hit. Read the full report published in partnership with Gatti Pavesi Bianchi here. 

The country's industrial and economic heartland in the northern regions of Lombardy, Veneto and Emilia-Romagna were the epicentres of the outbreak. Official figures show the economy contracted by 4.8% year-on-year in Q1. 

The early signs of the impact on M&A can been seen in the first quarter of the year. There were 12% fewer deals than Q1 2019, making it the weakest quarter in give years. M&A will be depressed as the majority of corporate investors will be fearful. Public markets will not reward risky corporate spending. Pharmaceuticals, non-discretionary consumer, and tech are in a strong position to prosper in the environment and those businesses which carry low levels of debt and high levels of cash may selectively target M&A opportunities now that valuations have fallen circa 25%. 


Private equity funds have an even greater opportunity to deploy capital than their corporate counterparts. High-quality assets will be available at attractive valuations and distressed companies in need of support will require capital restructuring. 

One of the most striking characteristics of this downturn has been its speed. This may point to a rapid rebound. However, there is good reason to believe the rebound will take longer than hoped as some distancing measures will have to remain in place to mitigate further waves of the virus. 

There are reasons for optimism thanks to areas of likely deal activity. Certain industries have been disproportionally affected by the pandemic, such as travel and leisure, transportation and oil and gas, may see upticks in M&A activity as buyers see opportunities for bargains. 


Download the full report. 

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