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Unveiling value: Italian M&A and PE activity in 2023

Italian M&A market defies slow economy

The value of Italian dealmaking activity in H2 2023 hit €46.9bn, up from €16.4bn in the first six months of the year, indicating a potential bottoming out of the market and a steep recovery, according to an exclusive new report from Italian law firm Gatti Pavesi Bianchi Ludovici (GPBL).

The biggest M&A deal announced in Italy in 2023 was US alternative investment behemoth KKR’s acquisition of FiberCop, comprising the fixed network assets of Telecom Italia, for €21.7bn.

Other sectors in which Italy excels, such as luxury consumer brands, are also contributing their fair share to the recent momentum in deal value. Aggregate value in Italy’s consumer sector rose by 43%, to €5.2bn, in 2023, thanks in large part to a pair of luxury-related plays for Valentino and Gruppo Florence.

Italian deal volume for 2023 stood at 1,181 transactions, a 10% fall compared to 2022 but still well above pre-pandemic levels, signalling that investor confidence is running relatively high. And while overall value for 2023 (€63.3bn) marked a significant 42% decline from 2022’s €108.3bn, this is not the fairest comparison, since 2022’s figures were inflated by the €42.7bn acquisition of Atlantia by Blackstone and Edizione in Italy’s largest ever take-private. Excluding this outlier, 2023’s performance is far more favourable, with a much less dramatic contraction.

The year-on-year decline mirrors the broader European trend, with the continent witnessing similar declines in both deal volume and value. Europe including the UK experienced an 11% drop in deal volume and a 28% decrease in deal value in 2023, to 13,157 deals worth €641.2bn in aggregate.

In the private equity space, activity closely tracked the downshift in M&A. The €38bn worth of buyouts equates to a 47% retreat on 2022’s €72.1bn, reflecting the difficulty large sponsors have faced in securing debt for big-ticket transactions.

While the Italian economy is far from roaring, ‘cautious optimism’ is a well-worn, but apt, platitude here. There are plenty of reasons to be bullish that Italy’s dynamic M&A market will continue to shrug off today’s lacklustre macroeconomic conditions, just as it has done so far.