Italian Companies’ Hidden Champions
Italy is home to one of the densest networks of vibrant and highly developed private-sector manufacturing companies in the world. Fueled by a unique brand of entrepreneurial spirit, thousands of manufacturing companies have sprung up since WWII and are blossoming along the A4 (Turin – Milan – Venice) and A1 (Milan – Bologna) corridors, transforming a once primarily agrarian economy into an industrial powerhouse. The combination of Italian entrepreneurs’ inventiveness and flexibility leads to excellence in sectors such as precision machinery; highly engineered mechanical products; measuring and other instruments; and electromechanical devices including controls and sensors.
The depth of these industry clusters, coupled with state-of-the-art technology, has led to the rise of many “industrial jewels”, leaders in both technology and financial performance. Surprisingly, many of these jewels are largely unknown outside of Italy, because these companies tend to be small by international standards, thus only known to the experts in the respective field. Content with the market opportunities offered in Italy, their export initiatives were traditionally limited to countries such as Spain where history of strong cultural and language affinities easily facilitates export transactions. Less emphasis and consistency was given to markets with a greater “cultural distance” such as Northern European countries or North America. Now, pressures of globalization are motivating many Italian companies to look outward for growth and future expansion.
As the large multinational corporations have been growing and merging, the gap between the latter and the small Italian enterprises has not appreciably narrowed.
However, the transition from a primarily domestic market to a global one is not easy. The forces of globalization impose a new set of unrelenting requirements on manufacturers: to be better or more cost-efficient than your competitors and to be able to project products into all corners of the globe.
Small companies, even excellent ones, typically don’t have the wherewithal and the size to meet these demands. This paradigm shift has made many small and medium-sized companies realize that in order to survive in the long run even well-run companies with excellent products will need more bulk to leverage their products on the world markets while continuing and even accelerating their R&D efforts. Thus many companies started to embrace proactive partnering strategies and alliances with larger corporations that have similar products and better access to the markets of the world. While pursuing this path, they are not rushing to make decisions, but they are very carefully evaluating their options and are generally open to interesting business proposals
The time is right to talk to some of these gems of the industrial world. If you are interested, call us or write to discuss acquisition opportunities in Italy.