Back to articles

Development of the Italian M&A market in the time of COVID-19

by Dr Antonio Zecchino

The pandemic not only had a major impact on our social lives, but also on the M&A market. We have conducted an analysis of the M&A market in Italy in 2020, and in this article we share some interesting results and provide an outlook for 2021.

The Italian M&A market in 2020

In 2020 the Italian market faced a downturn of 31% (in EUR billion) and 20% (number of deals) compared to 2019. In the first semester of 2020 there was a significant slowdown in M&A activity as a result of the lockdown, and extreme uncertainty about the outlook for economic recovery. In the second semester, there was a resumption of M&A activity.

Financial and industrial investors demonstrated a strong interest in resilient businesses with solid and clearly defined business plans, as well as in vertical integration deals.


The outlook for family-run business in 2021 and upcoming years

  • Financial and industrial investors still demonstrate high interest in M&A, but M&A transactions generally are expected to take a longer time to conclude and will become more complex.
  • Selling and merger processes place a greater emphasis on well-defined objectives, and the preselection of potential partners is a critical aspect to a deal’s success.
  • A solid and detailed business plan is essential for M&A deals. Investors must be more selective, focused and demanding.
  • Rigid sale and merger processes don’t work anymore. Flexibility and a tailor-made approach is needed.
  • Previously, there was much convergence on the valuation criteria. Nowadays, there is more asymmetry between bidders and sellers in terms of valuation. The key issues are:

i. How many years should be considered to define normalised and sustainable profitability?

ii. Increasing use of adjustment tools in order to determine transaction value is important. This includes: earn-out, reverse earnout, ratchet clause, dividend policy, etc.

iii. A well-defined contract structure, governance, more articulated SPA and SHA requirements, and the use of hybrid instruments are all crucial factors to successfully closing a deal.

  • Private equity funds are becoming more interested in:

i. Minority share transactions;

ii. Resilient sectors and targets;

iii. Buy & build strategy.

Macroeconomic conditions influence the M&A market. For a strong and rapid recovery no other exogenous shocks must happen. Further macroeconomic factors that influence the M&A market are listed in the full report, which you can read here.

Published: Photo: Ekaterina Belova -

13 December 2021

Dr Antonio Zecchino

Cavour Corporate Finance, Chairman

Cavour Corporate Finance