Stefano Bianchi: “Italy’s entrepreneurial texture is defined by an array of sophisticated, complex SMEs”
Celebrating its 60th anniversary this year, Pavia e Ansaldo is a longstanding law firm of repute in Italy. Its managing partner tells us about his vision for the firm.
Leaders League: The Italian legal market for M&A and finance is a mixture of full-service firms, mid-size international firms, and small boutiques, all of which claim that their business model is the best. What makes Pavia e Ansaldo competitive?
Stefano Bianchi: We are very established: we have had three generations of partners over a 60-year period. Our development has been with an international vocation, but with deep roots in Italy. Our positioning is as one of Italy’s big multi-disciplinary law firms. The giant US and UK firms have a highly qualified but relatively narrow market in terms of client portfolios and practices. We, on the other hand, focus on the middle market in M&A and private equity (PE), which covers a lot of ground. We assist multinationals and PE firms on the M&A side and to some extent on the financing side.
Italy is mid-market by definition: the country’s entrepreneurial texture is defined by an array of sophisticated, complex small to medium-sized enterprises (SMEs), very oriented towards export and internationalization. We are well equipped to assist this kind of firm in their expansion in Italy and abroad, not least thanks to our offices in Moscow, Tokyo and Barcelona.
We are also well equipped to handle inbound investments. Our approach is appreciated: it’s tailored rather than commoditized. But we’re not a super-boutique: that’s not what we’ve historically been. Our point of reference has long been that of a multi-service firm.
You’ve been managing partner since 2015. What was your vision when you set out?
I wanted to shepherd through a process of generational change in the law firm and the partnership, without losing any of the rich quality and professional expertise of our senior lawyers. Our achievement of this has put us in a perfect position with a new generation of partners, fully motivated to represent the firm today and in the future.
This was a very delicate process, and passed through two key phases. Firstly, there was a change in the corporate governance of the law firm: more inclusion, more collegiality, and a board of directors. We have team members delegated by the board to be in charge of various functions in the firm, such as associates’ well-being, real estate or compliance.
Secondly, there was a change in the system of compensation of partners, and apportionment of earnings. We tried to find a thoughtful solution, and we think we were successful in reaching an excellent compromise between origination and engagement. We came from a modified lockstep system; this was perfect 10-15 years ago, but we needed to change the system and consider the different capabilities and specialization within the law firm. We wanted to incentivize the work that brilliant partners can perform, even if they’re not the originator. But we also wanted to recognize and reward originators. So there’s a balance between these two drivers.
We have chosen to take three years for evaluation: that is to say, we evaluate partners’ origination and engagement on a rolling basis every three years. So a single good year, or a single bad year, will not automatically impact compensation. It’s about consistency. We are in line with a model that has been adopted by other excellent international law firms.
Despite all the difficulties since the pandemic, we are in a privileged position to be a protagonist in the market with our new partners, and be attractive for young, motivated, talented partners.
Could you talk us through a couple of the most interesting M&A deals the firm has handled this year, and what made them interesting?
Paola Carlotti and I led a team of young lawyers on the Itelyum deal: we advised Itelyum’s managers, and its owner – the third fund of Stirling Square Capital Partners – on the sale of the company to German fund DBAG and the fourth fund of Stirling Square Capital Partners.
Itelyum is a leading company for recycling industrial waste. This is of course a great challenge for society, and these kinds of company help change the territory, recycling oils or chemicals on a mass scale. Our involvement in assisting the company, the PE firm and the managers was key to the success of the deal, which was worth hundreds of millions of euros. Franco Agopyan of Chiomenti advised Stirling Square’s fourth fund; Bruno Gattai of Gattai, Minoli, Partners acted for DBAG.
Additionally, our partner Adriano Villa – who has the very rare distinction of having been an Italian lawyer registered as a foreign practitioner in Japan – advised medical devices company Asahi Intecc on its acquisition of a 70% stake in Italian life sciences company Kardia.
Are there any trends in the market worth commenting on?
We are in the middle of a clear M&A and PE rebound in Italy. There are three key factors here: firstly, the implementation of the European recovery fund, an exceptional opportunity to digitalize the country and promote the ecological transition. This could render Italy a far better field for inbound investments.
Secondly, Mario Draghi’s government is particularly trustworthy in implementing this plan. Whenever there is an opportunity, it has to be seized. Draghi, former head of the European Central Bank, can be trusted to seize it.
Thirdly, there are huge amounts to be invested in Europe. Italy is a sophisticated target as far as entrepreneurs are concerned, not just for fashion and luxury goods, but for industrials and chemicals, hi-tech components, pharmaceuticals and biotechnology, and food and beverages.
How does Pavia e Ansaldo incorporate ESG (environmental, social, governance) considerations into its activity?
We haven’t implemented extremely strict policies, with automatic barriers that exclude certain clients, but we apply very careful consideration of these policies when we are hired by clients. ESG isn’t just environmental issues, but values such as gender equality that we actively promote on our website and elsewhere.
Recently, we hosted Commonwealth Secretary-General Patricia Scotland QC in our Rome office for an international congress on the right of asylum from a gender perspective. The problem, in a nutshell, is that there are no specific protections for women as a group, despite them needing special protection when it comes to the right of asylum. There was a passionate debate – nothing to do with pure business, but a law firm like Pavia e Ansaldo, with such a long history and with the aspiration to be an institution, cannot be insensitive to these kinds of issues and themes, which have a lot to do with our expertise in law.
What are the key market challenges you foresee over the next few years, and how does the firm plan to overcome them?
There will be big efforts towards both the environmental transition and digitalization. These changes will depend on the recovery plan and the enormous amounts of money that will be available for European countries to pursue goals and achievements that had long been considered important but, because of a lack of money and willingness, never primary.
Today, the agenda has changed, and when the agenda changes, markets cannot be insensitive to it. And these changes will happen on a European scale. This in turn will mean a lot of opportunities for law firms. Clients will need sophisticated legal services. The GDPR (General Data Protection Regulation) is a good example: when privacy rights started being taken seriously on a European level, law changed. A lot of law firms truly realized that they too needed assistance in this respect. Something similar will happen when it comes to the environmental transition and digitalization.
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