In a recent fireside chat, Pietro Busnardo, Founder & Managing Partner at Gradiente, shared his insights on improving family-owned businesses. The discussion, hosted by Giovanni Amodeo, covered a range of topics from Busnardo’s background to the evolution of private equity in Italy. Here are the key takeaways from the conversation.

Pietro Busnardo’s Journey: Busnardo began his career as a mechanical engineer before pursuing an MBA at MIT, where he studied finance. His professional journey includes stints at McKinsey and as a venture capitalist. The 2008 financial crisis inspired him to establish Gradiente, focusing on providing financial support to companies in a more hands-on manner compared to traditional private equity.

Evolution of Private Equity in Italy: Busnardo observed three significant cycles in Italian private equity:

• Early 2000s: Dominated by financial engineering and high leverage.
• Post-Lehman Crisis: A shift towards regional private equity with a hands-on approach.
• Post-COVID Era: Emergence of mid-sized funds and increased complexity in fundraising and management.

Challenges and Opportunities for Entrepreneurs: Busnardo highlighted the changing attitudes of Italian entrepreneurs towards private equity. Initially resistant, many now see the value in professional investors for growth and succession planning. He noted a preference for club deals among some entrepreneurs but emphasized the benefits of partnering with professional funds.

Talent Acquisitionin Small Towns: Addressing the challenge of attracting talent to smaller towns like Padua, Busnardo stressed the importance of finding managers with an entrepreneurial spirit. He believes that the quality of life in these towns can be a significant draw for the right candidates.

International Expansion Strategies: Gradiente focuses on identifying companies with potential for international growth. Busnardo shared examples of successful expansions through acquisitions and strategic partnerships, emphasizing the importance of a structured approach to entering new markets.

Operational Value Creation: Busnardo discussed the importance of operational improvements alongside financial strategies. He believes that while multiple arbitrage opportunities still exist, the focus should be on enhancing internal management and processes to create sustainable value.

Future of Private Equity in Italy: Looking ahead, Busnardo expects an increase in exits and secondary market activities. He sees a growing role for country specialists in managing smaller companies and believes that the Italian market will continue to attract international investors.

Conclusion: Pietro Busnardo’s insights provide a comprehensive overview of the evolving landscape of private equity in Italy. His emphasis on hands-on management, international expansion, and operational improvements offers valuable lessons for entrepreneurs and investors alike.

Key timestamps:

00:09 Introduction
02:26 Evolution of Private Equity in Italy
05:41 Entrepreneurs’ Perspectives on Private Equity
07:51 The Importance of Governance in Business Transformation
09:25 Challenges in Attracting Talent to Small Markets
11:19 Internationalization Strategies for Acquired Companies
13:53 Market Selection: Fragmented vs. Dominant Players
18:00 The Future of EBITDA Multiples in Private Equity
19:39 Attitudes Towards Debt and Private Credit in Italy
22:15 Transforming Companies for Investment
23:24 Future Exits in Private Equity
24:09 Growth of Secondary Markets in Italy
25:14 The Importance of Local Specialists