The Private Equity: a cross-country comparison between Veneto and Grand Est

Abstract

This dissertation intends to investigate the Private Equity industry by comparing two different regions: Veneto, Italy and Grand Est, France. The purpose is to analyse the strategies investors adopt when selecting target firms. The choice of the regions is based on the cities that welcomed my two M.Sc.’s years, the first one in Venice and the second one in Strasbourg. The project aims at attempting to give another explanation of the reasons why the Private Equity industry in Italy struggles to succeed. For this purpose Grand Est turned out to be an important term of comparison, as it presents an economic fabric very similar to Veneto. This rises the question about why in the Eurozone, small and medium French companies are the best in attracting investments from foreign operators while Italians are among the worst. Starting with a short analysis of the Small and Medium Enterprises, the paper will summarise all the concepts developed regarding the Private Equity sector in the literature. Moreover, using a practical approach, the study analysed the Private Equity operations in the two aforementioned areas. Through surveys and interviews to the main players in the market, the project tries to

identify a dummy company profile that has more chances of obtaining the financial and non- financial Private Equity support.

This thesis is intended to overcome the round-block marked by the literature as regards the age- old reasons for Private Equity activity constraint: the undercapitalisation of Italian firms. In order to

accomplish this goal, the paper offers a new approach regarding the future of Italian SMEs. The findings of the project are surprising. The cross-regional analysis reveals that the territories under observation are experiencing two opposite Private Equity market trends. In Veneto, many companies and market experts are familiarising with this form of investment while Grand Est shows a slight market decrease. The investment process, strictly supervised by the law, is similar in both regions, such as the improvements obtained in the target firms after the supporting period. The real difference is given by their organisation. In Grand Est they act as a unified network, while in Italy they operate separated, burdened by high competition. Private Equity is a very flexible organisation, because of its ability to adapt to every country’s rules and industrial framework. This explains why instead of focusing on the corporate side, more importance is given to funds operations. This paper aims at providing a practical explanation of the Private Equity market in Veneto and Grand Est, distancing itself from those rhetorical talks where the possibility of finding solutions are too often bogged down. An answer to the question regarding development issues for Italian Private Equity funds is provided, and the paper covers the processes behind their investments. Further studies are needed to establish guidelines and solutions to emerge from this deadlock.