An 'Italian way to private equity'? The rhetoric and the reality

In Chapter 8, Cattero shows that SWF and HF investments in listed Italian companies have been limited and without significant consequences on labour and industrial relations. Private equity, instead, has been a significant development. Building on statistical data, three short case studies and the empirical evidence linked with the financial crisis, Cattero discusses the thesis that there exists a specific “Italian way to private equity”. Speculative private equity based on high leverage absorbed the bulk of resources and with the crisis many companies were on the brink of bankruptcy. Due to the lack of independent research on private equity it is however impossible to assess many statistical data and particularly the ones on investments in medium-small size firms. Against this background four ideal types of private equity are finally proposed in order to advance social research on the sector: two types which are antithetical to each other (the “entrepreneurial” and the “speculative”) and two hybrid forms in between (the “industrial buy out” and the “financial expansion”). The typology proposed is useful for more systematic investigation and also to gauge the possible influence of – or the impact on – context variables like industrial relations in different countries. As regards Italy, industrial relations have not had any influence. Given the weakness of trade unions in the private sector, the limited nature of collective bargaining at company level and the absence of any form of participation in the governing body of companies, trade unions and their representatives have very little potential to bargain over the possible entry of funds into companies. They may be informed about the entry of PE as negotiations are underway but normally they receive the information only after the event. At best, they may be able to bargain over the restructuring that follows PE investment, however in the case studies unions were without any influence or powerless.