The strategic role of innovative finance and the “Mercato Alternativo del Capitale” (MAC) for business succession in Italian family firms

Family firm succession can be enhanced by opening the corporate structure to new investors. This paper aims to assess the effectiveness of two specific economic instruments used to support business succession for family firms in the specific Italian context: innovative finance such as private equity and the “Mercato Alternativo del Capitale” (MAC) - considering the positive experience of the equivalent Alternative Investment Market (AIM) in England. Desk analysis (national database figures) and field analysis (interviews and documents collected from a representative sample of banks and companies) have yielded several significant results: data from the Private Equity Monitor (PEM) indicate that in Italy, between 2000 and 2007, over 600 private equity operations were carried out; of these, 66% were represented by buy-out operations while replacement capital financing did not exceed 5%. These data suggest that the creation of an Italian MAC could stimulate replacement capital operations. On the basis of the above results, the following conclusions can be deduced: i) generational turnover and the opening up of the corporate structure of Italian SMEs can in general be successfully supported through private equity operations; ii) at present the same positive results are not recorded for operations performed using the MAC; iii) the MAC will only be able to play a significant and strategic role in this context when it is successfully launched and becomes more widely diffused; iv) institutional investors, as the only entities qualified to purchase the issued shares, will be the leading actors in the evolution of the MAC: they have to prove that they are willing to change their investment policy from financing enterprises to financing equity.