Add-on to increase the presence in Italy

Managing a subsidiary operating on the Italian market might be disappointing for an International corporation as the domestic demand in Italy is stagnant. We herewith suggest an aggressive strategy: taking advantage of the depressed demand for acquiring a small competitor in Italy and improve the subsidiary's competitive position: add-on is a great opportunity today. See how to do it.


What type of add-on: general strategy

I would believe that the best way to grow in today's market is to acquire market shares. I am not saying that acquiring a company with appropriate products and know-how would not be work but an International corporation would do that based on its worldwide product strategy rather than on local opportunities. So rationale is horizontal grow, focus is on Sales.

What type of target for add-on

I would focus on the acquisition of commercial companies or industrial companies with low internal production (say low make and high buy) and strong sales and distribution network in a specific geographical area. Acquiring a target company with a strong label (or at least with a label with a high loyalty customer base in a specific area) would also be an appropriate add-on.

Finally I would expect the size of the target company to be rather small. So I would focus on a small target with a recognised label and a strong distribution in a specific area.

At what price

A commercial company has a high value when sales and margins are growing but its value gets immediately lower as Sales slowdown. We would expect that a small company with Sales in the 5 to 10 million Euro range would be priced at a substantial discount compared to the acquiring company's price multiples. This would allow an increase in value for the combined entity even before developing synergies between the two companies.

How EqS can help

Once we discussed the appropriate target for the acquiring company then the process may start. However market scouting, contacts and negotiations to acquire a small target require dedicated resources, legal and tax expertise and a substantial time effort to the acquiring company. That's why this process is generally given to outside professionals. We at EqS may help as we have experience in over 100 deals in the middle market in Italy. Moreover we are used to work for international corporations and our procedures perfectly meet the client's requirements. Should you have any interest in discussing how EqS may help in add-on in Italy, please contact us.