Last week’s sale of kitchen appliance manufacturer Indesit, the latest in a long line of large Italian family businesses recently sold to foreigners, could be a wake up call for the government to make the country more business friendly, a family business academic says.
The Merloni family sold its controlling 60.4% stake in the company to US competitor Whirlpool for €758 million, bringing to an end four generations of family control. It was the largest producer of home appliances in Italy.
The firm, which is headquartered in Fabriano and has plants in Italy, Poland, Britain and Turkey, had seen increasing competition from China in recent years.
Over the past decade, Italy has seen a number of family firms, which account for 93% of the nation’s businesses, sell to multinational corporations.
French luxury empire LVMH, controlled by the Arnault family, has alone snapped up the likes of accessories brand Bulgari, cashmere specialist Loro Piana and high-end coffee shop Cova in the past couple of years.
In 2011, French dairy giant Lactalis succeeded in the hostile takeover of Italian competitor Parlamat.
Professor Alfredo De Massis, director of the Centre for Family Business at Lancaster University Management School, said a lack of governmental support for international expansion and high bureaucracy are the biggest problems facing family businesses.
“Acquisitions like Indesit are producing a cultural shock that I believe will provide Italy with the trigger it needs to become more aligned with more successful countries,” De Massis said, adding that the notorious slowness of offices that manage bureaucratic legislation is hitting not just family businesses, but the nation’s economy.
De Massis said more sales of family businesses are in the pipeline, changing the face of business in the country forever, and that an ageing population of entrepreneurs without successors is also part of the problem.
“The Italian economy will be less characterized by small family run businesses, but the real challenge is whether the big firms will be able to preserve the good qualities of family-owned business. So far I think that is happening.”
Italy’s economy shrank 1.4% in 2013, but the government is expecting growth of 0.8% in 2014.