"Collaboration between France and Italy in the field of M&A, joint ventures and partnerships is set to grow"

LEADERS LEAGUE: What services can CastaldiPartners’ clients benefit from and what are CastaldiPartners’ main strengths?

Gaspare Dori: We offer an extensive range of legal services tailored for businesses, covering both contentious and non-contentious matters, including M&A and corporate, dispute resolution, real estate, employment, IP, competition, regulatory and ESG-compliance.

What truly sets CastaldiPartners apart from its competitors is its distinctive focus on cross-border transactions and matters, as well as its attention to the current transformation of the legal environment due to the impact of AI and the cultural shift towards ESG policies and requirements.

We are also recognized as one of the leading firms advising French and Italian companies on their matters across both countries. Eighteen of our lawyers are enrolled in both the Italian and French bars, further confirming the unique expertise we have demonstrated over CastaldiPartners’ 28-year history.

LEADERS LEAGUE: In your opinion, can Italy be a strategic market for French companies when it comes to internationalization?

Anne-Manuelle Gaillet: Italy is definitely a strategic M&A market for the internationalization of French companies for several key reasons, in the context of France’s gradual deindustrialization, the strong internationalization of Italy’s industry and the still high number of family-owned businesses in Italy that are in need of transition.

Firstly, deindustrialization in France in the 80s and 90s weakened certain manufacturing sectors, leading French companies to seek growth opportunities abroad. Italy, which maintains a strong and competitive manufacturing base, particularly in industries such as luxury goods, automotive, precision mechanics and agri-food, is an attractive target, not least because it offers opportunities not exclusively limited to the Italian market.

French companies should see investment in an Italian company as an opportunity to offset their loss of domestic industrial competitiveness by acquiring specific know-how and Italian production capabilities. Secondly, Italy has an open economy where small and medium-sized enterprises (SMEs) play a crucial role in exports and often seek international partnerships to strengthen their global market position. Italy has managed to sustain a network of dynamic SMEs, often leaders in their niches, with a strong export orientation which makes having an Italian partner a springboard for exports; moreover, those SMEs are often family-owned and have successfully internationalized while becoming leaders in their sectors.

LEADERS LEAGUE: What do you think French companies that decide to invest in Italy should know?

Gaspare Dori: The most sensitive factor to be considered is cultural difference. Many Italian companies, especially in the manufacturing and food sectors, are family-owned SMEs. These businesses often prioritize preserving their legacy and may have different expectations and negotiation styles compared to French corporations. In addition, post-acquisition integration in Italy may be more gradual, with a focus on maintaining the acquired company’s existing management and operational structure. Regarding the mechanics of an M&A deal, a French purchaser must bear in mind that, in Italy, a public notary is required for share transfers and for most corporate transactions such as mergers, de-mergers, contributions in kind and transfers of a business as a going concern. This could have an impact on timing, if not properly anticipated. However, workers’ council consultations are not undertaken in M&A deals other than asset deals and in any case with a strict calendar provided by law, which makes the process smoother.

LEADERS LEAGUE: Do you see Italian-French collaboration in business blossoming further?

Anne-Manuelle Gaillet: The future collaboration between France and Italy in the field of M&A, joint ventures, and partnerships is set to grow, especially under the framework of the Quirinal Treaty, which entered into force in 2023 and aims to strengthen bilateral ties across sectors and therefore to enhance political and economic cooperation.

I see key future trends in M&A activities, industrial partnerships, joint ventures in technology, infrastructure projects and support to SMEs and startups. As far as M&A trends are concerned, this treaty is expected to reduce political and regulatory barriers, facilitating more cross-border M&A deals in sectors like energy, defense, automotive and luxury goods. Industrial partnerships should be encouraged.

We already foresee strong cooperation in the defense and aerospace sectors with companies like Leonardo and Thales likely expanding joint projects in advanced technologies, such as drones and AI. The Stellantis merger highlights how France and Italy can integrate strengths, with more joint ventures expected in electric vehicle technology and mobility solutions.

Additionally, the luxury sector could see further consolidation as brands seek global expansion. There is also room for joint ventures in technology where the treaty promotes collaboration in science and innovation, encouraging joint ventures in AI, biotech and green technologies.

We also see various major infrastructure projects involving bilateral coordination between the two countries, such as the Lyon-Turin high-speed rail line and conversely strong opportunities for collaborations between SMEs and startups especially in innovation sectors like fintech, cleantech or medtech. Venture capital collaborations and start-up incubators will likely be key areas of growth.

Of course, we hope that the governments of both countries will harmonize certain of their national regulations, in order to encourage more foreign direct investment and simplify cross-border deals. The cooperation between French and Italian industries is key to European growth, as they are very complementary, one to the other, and have the potential to create European champions able to face the challenges of a global market.

LEADERS LEAGUE: Comparing Italy to France, what significant differences have you seen in terms of industry sectors?

Gaspare Dori: The economic backgrounds of France and Italy are significantly different. France has a strong focus on technology, telecommunications, utilities and energy. These industry sectors are well-supported by both the banking system and the French government, which provides incentives, particularly for environmentally friendly projects. Luxury goods, fashion and the automotive sector have a renowned and established presence in both countries. In recent years, these sectors have demonstrated that French and Italian companies can successfully collaborate, as evidenced by partnerships like Luxottica-Essilor, Kering-Gucci and Stellantis.

Italy’s most prominent industry sectors are undoubtedly manufacturing and food. Unlike in France, however, most Italian companies operating in these markets are SMEs. Another main difference is the role played in the two countries by PE and VC funds. France has a more mature and larger PE and VC market compared to Italy.

This is reflected in the higher investment volumes and the broader range of sectors attracting investment in France. While both countries see significant levels of investment in technology, France has a stronger emphasis on tech startups and innovation-driven sectors. Italy, on the other hand, has a robust focus on traditional industries like manufacturing and food.
PE-backed companies in both countries are performing well, but Italian PE-backed firms have slightly higher revenue growth rates. VC-backed startups in France tend to achieve higher valuations and more successful exits due to a more developed ecosystem.

GASPARE DORI Partner, CASTALDIPARTNERS and ANNE-MANUELLE GAILLET Partner, CASTALDIPARTNERS.