Edition by Guido Corbetta, Fabio Quarato, Alessandro Minichilli 21st November 2016

Transcription

1 In collaboration with: v AIdAF-EY Chair in Strategic Management of Family Business in memory of Alberto Falck 8 The AUB Observatory Report on Italian Family Firms Edition by Guido Corbetta, Fabio Quarato, Alessandro Minichilli 21st November

2 2 The eight editions of the AUB Observatory on Italian family firms The AUB Observatory: a journey of eight years to get to know Italian family firms Benchmark family firms 8 Updated leadership models increase acquisitions & IDE 7 A European comparison with larger companies 6 The change of FDI geographical focus 5 The necessary transitions in family firms The challenge of opening towards the outside The challenge of joint leadership The family is good for the company 1

3 Index I. The firms included in the AUB Observatory II. AUB family firms performance III. The successful family models and the 200 Benchmark AUB family firms IV. M&A activities V. The internationalization through FDI VI. The firms of the «Elite» program VII. Family holding companies and the first 100 industrial groups with an holding company VIII. A European comparison 3

4 The firms included in the AUB Observatory The population

5 The research population The starting population is composed by all the active firms with revenues > 5 mln in the fiscal year starting database Database used for analyses Database of AUB family firms Population of firms with revenues > 5 mln Firms with revenues < 20 mln in 2014 Firms with revenues > 20 mln Non-family firms with revenues >20 mln Family firms with revenues > 20 mln 5

6 The AUB population of the 8 edition Ownership structure Small * Medium-Large ** Total N % N % N % Family firms ,5% ,2% ,4% Branches of foreign companies ,5% ,9% ,8% Coalitions 450 5,2% 476 6,6% 926 5,8% Cooperatives and Consortia 533 6,1% 382 5,3% 915 5,8% State/Local authorities 255 2,9% 347 4,8% 602 3,8% Controlled by Investment Funds/ PE 91 1,0% 158 2,2% 249 1,6% Controlled by Banks/Insurance 47 0,5% 61 0,9% 108 0,7% Controlled by Foundations 11 0,1% 1 0,0% 12 0,1% Public companies 0 0,0% 2 0,0% 2 0,0% Total ,0% ,0% ,0% (*) Small: firms with revenues between 20 e 50 mln at the end of 2014 (source: Aida). (**) Medium-Large: firms with revenues exceeding 50 mln at the end of 2014 (source: Aida). 6

7 AUB firms by size Number Total revenues (billion of euros) Total Employees (mgl) Revenues >250 mln (7,0%) 730 (13,3%) 1.281,1 435,2 (54,1%) 845,9 (75,5%) 2.823, ,7 (51,8%) 1.628,9 (63,8%) Revenues mln (12,0%) 898 (16,4%) 230,5 108,5 (13,5%) 122,0 (10,9%) 679,1 346,9 (15,1%) 332,2 (13,0%) Revenues mln (21,8%) (23,6%) 187,1 107,6 (13,4%) 79,5 (7,1%) 603,2 316,9 (13,8%) 286,3 (11,2%) Revenues mln (59,2%) (46,8%) 225,3 152,8 (19,0%) 72,5 (6,5%) 753,4 445,7 (19,3%) 307,7 (12,0%) Total (100%) (100%) ,1 (100%) 1.119,9 (100%) 4.859, ,2 (100%) 2.555,1 (100%) Family Non-family 7

8 AUB firms by industry N Firms % family Revenues (billion of euros) % family Mobile-arredo Furniture Commercio di autoveicoli Vehicles Prodotti Metallurgy in metallo Sistema Fashion moda Attività Finance finanziarie and Real e immobiliari Estate Carta Paper-Print e stampa Other Altro manifacturing manifatturiero Gomma Rubber-Plastic e plastica Alimentare Food & Beverage e bevande Construction Costruzioni Commercio Retail al dettaglio trade Electronics Elettronica Commercio Wholesale all'ingrosso trade Machinery Meccanica Means Mezzi of di transport trasporto Chimico-farmaceutico Pharma-Chemical Transport Trasporti & e Logistic logistica Other Altri services servizi Business Servizi alle services imprese Energia ed estrazione Energy ,8% 87,9% 83,2% 83,0% 79,7% 75,2% 73,5% 71,8% 69,5% 68,5% 67,5% 65,6% 64,8% 63,1% 61,2% 56,9% 53,0% 50,1% 46,3% 34,0% Attività Finance finanziarie and Real e immobiliari Estate Mobile-arredo Furniture Prodotti Metallurgy in metallo Sistema Fashion moda Carta Paper-Print e stampa Construction Costruzioni Alimentare Food & Beverage e bevande Commercio di autoveicoli Vehicles Electrronics Elettronica Commercio Retail al dettaglio trade Other Altro manifacturing manifatturiero Gomma Rubber-Plastic e plastica Chimico-farmaceutico Pharma-Chemical Machinery Meccanica Transport Trasporti & e Logistic logistica Means Mezzi of di transport trasporto Commercio Wholesale all'ingrosso trade Business Servizi alle services imprese Other Altri services servizi Energia ed estrazione Energy (*) Other manufacturing: i) tobacco; ii) repair, maintenance and installation of machinery and equipment; iii) manufacture of jewelry, musical instruments, sporting goods, toys and medical supplies. For further information, see the methodological note. 11,8 39,3 18,7 50,8 48,2 45,2 35,4 34,6 31,7 74,1 69,1 85,1 74,3 105,4 99,4 112,8 149,2 178,6 292,3 368,0 92,9% 91,4% 75,2% 74,4% 58,4% 58,3% 57,4% 48,7% 47,2% 45,7% 44,7% 43,7% 42,8% 38,4% 37,2% 36,5% 34,0% 32,3% 24,5% 13,2% 8

9 The geographic location Total number of firms mln >50 mln Region N % Family N % Family N % Family North West ,6% ,8% ,3% Lombardy ,3% ,3% ,5% Piedmont ,9% ,7% ,6% Liguria ,2% ,4% ,9% Valle d'aosta 27 48,1% 16 50,0% 11 45,5% North East ,5% ,7% ,3% Veneto ,9% ,2% ,1% Emilia-Romagna ,6% ,6% ,8% Trentino-Alto Adige ,5% ,2% ,0% Friuli-Venezia Giulia ,9% ,0% ,7% Center ,6% ,9% ,0% Lazio ,2% ,7% ,9% Tuscany ,0% ,4% ,1% Marche ,2% ,4% ,0% Umbria ,6% 94 76,6% 93 64,5% Sud e Islands ,2% ,0% ,8% Campania ,0% ,3% ,5% Sicily ,8% ,8% ,9% Puglia ,9% ,2% 99 73,7% Abruzzo ,8% ,3% 81 63,0% Sardinia ,8% 68 69,1% 43 60,5% Calabria 55 80,0% 47 80,9% 8 75,0% Basilicata 42 73,8% 29 72,4% 13 76,9% Molise 17 70,6% 11 72,7% 6 66,7% Total ,4% ,5% ,2% 9

10 AUB family firms performance The recovery goes on also in 2015* * Financial data coverage in 2015 is around 80% of the entire population of the AUB Observatory

11 The growth trend in medium and large firms The medium-large family firms have grown more than non-family firms 150,0 140,0 130,0 120,0 110,0 Non Non-family Familiare Familiare Family 145,2 131,8 100,0 90, Non-Family (>50) Coalitions Cooperatives and Consortia Controlled by Investment Funds/PE State or Local Authorities Branches of foreign companies (*) Cumulative growth (100 in base year 2007), calculated on the basis of sales revenues growth rates (source: Aida). Cumulative growth for non-family firms has been calculated as the weighted average of sales revenue growth rates of non-family firms with different ownership structures. 11

12 The growth trend in small firms Small family firms have recorded growth rates in line with non-family firms 150,0 140,0 130,0 120,0 110,0 100,0 Non-family Familiare Familiare Family 145,8 142,6 90, Non-Family (20-50) Cooperatives and Consortia Controlled by Investment Funds/ PE Coalitions Branches of foreign companies State or Local Authorities (*) Cumulative growth (100 in base year 2007), calculated on the basis of sales revenues growth rates (source: Aida). Cumulative growth for non-family firms has been calculated as the weighted average of sales revenue growth rates of non-family firms with different ownership structures. 12

13 The dispersion of growth rates in family firms The percentage of declining firms remains high Medium and large AUB family firms , ,7 18, ,1 26,1 30,5 32, ,9 22,5 11,9 9, ,3 23,8 33,4 33,5 Minore < 0 di 0 Tra 0-10% 0 e 10% Tra 10-20% e 20% Maggiore > 20% di 20% Small AUB family firms ,5 28,8 25,8 19, ,1 24,4 26,7 33, , ,2 7, ,3 22,7 28,8 36,2 Minore < 0 di 0 Tra 0-10% 0 e 10% Tra 10-20% e 20% Maggiore > 20% di 20% 13

14 Operating profitability in the medium and large firms Medium and large family firms continue to maintain a positive gap of operating profitability... 11,0 10,5 Non-family Familiare Familiare Family ROI 10,0 9,0 8,0 7,0 6,0 8,1 9,1 6,6 7,2 5,7 8,1 8,0 6,7 6,5 7,0 5,8 7,5 6,0 8,1 6,8 8,6 7,5 5, Non-Family (>50) Branches of foreign companies 9,1 7,0 5,8 7,5 7,3 6,8 6,9 7,9 9,0 Coalitions 8,9 8,0 6,6 7,9 7,0 6,1 6,1 6,9 7,5 Controlled by Investment Funds/ PE 6,6 7,1 4,7 4,9 4,6 4,2 5,0 6,0 6,6 State or Local Authorities 5,3 4,7 6,1 6,3 5,6 4,3 5,7 6,8 5,2 Cooperatives and Consortia 5,6 4,7 4,2 3,7 3,8 3,0 3,1 3,5 3,3 14

15 ... and the same happens in small firms Operating profitability in small firms Non Non-family Familiare Familiare Family 11,0 10,4 ROI 10,0 9,0 8,0 7,0 6,0 7,4 9,0 6,7 7,4 5,6 8,0 8,0 6,2 6,4 7,2 6,2 7,8 6,5 8,6 8,8 6,8 7,0 5, Non-Family (20-50) Branches of foreign companies 8,5 7,8 6,1 7,2 7,4 7,6 8,2 8,0 8,2 Coalitions 9,0 7,7 6,2 7,0 6,8 5,6 6,1 7,1 7,6 State or Local Authorities 3,9 4,6 4,1 4,4 4,8 4,4 5,4 6,2 7,5 Controlled by Investment Funds/PE 8,1 4,6 4,3 7,8 6,8 4,8 3,3 5,4 4,6 Cooperatives and Consortia 5,5 4,5 4,5 4,0 4,6 4,2 4,5 4,6 4,2 15

16 ROI dispersion in family firms The percentage of firms with negative ROI is (almost) back to 2007 levels Medium and large AUB family firms ,8 55,3 27, ,8 59,2 25,2 7, ,8 55,8 22 8, ,3 47,8 33,7 13,2 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% < Minore 0 di 0 Tra 0-10% 0 e 10% Tra 10-20% e 20% Maggiore > 20% di 20% Small AUB family firms ,3 55,6 25,9 11, ,3 57,1 24,5 9, ,2 54,8 22,6 9, ,6 46,1 33,6 13,7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% < Minore 0 di 0 Tra 0-10% 0 e 10% Tra 10-20% e 20% Maggiore > 20% di 20% 16

17 The net profitability in the medium and large firms The large and medium family firms still show a positive net profitability gap... ROE 13,0 11,0 9,0 7,0 5,0 3,0 Non-family Familiare Familiare Family 12,3 11,3 9,4 9,8 8,9 8,3 8,6 7,6 7,7 7,9 6,8 6,2 8,0 7,2 3,9 5,4 5,7 4, Non-Family (>50) Branches of foreign companies 9,8 5,9 3,3 8,9 8,5 6,8 6,1 6,6 9,2 Coalitions 13,6 11,9 9,0 10,2 8,4 6,3 5,2 7,0 7,0 State or Local Authorities 4,3 5,0 4,9 6,4 1,6 2,5 4,1 4,8 4,9 Controlled by Investment Funds/PE 1,9 1,1-6,9 1,7 1,0-3,3-0,8 1,8 4,2 Cooperatives and Consortia 4,6 3,5 4,2 4,4 5,0 1,4 1,1 1,9 0,7 17

18 ... and the same happens in small firms The net profitability in small firms Non-family Familiare Familiare Family 15,0 ROE 13,0 11,0 9,0 7,0 10,7 6,8 12,7 8,5 10,0 6,6 8,4 10,4 9,8 6,7 6,8 8,9 8,6 5,6 5,5 10,3 6,9 5,0 3,9 3, Non-Family (20-50) Branches of foreign companies 9,6 7,3 3,1 7,1 6,9 6,2 6,4 7,9 10,2 State or Local Authorities 0,2 3,3 2,6 3,2 4,0 4,3 4,6 3,0 9,9 Coalitions 13,3 10,5 7,5 10,6 9,0 7,6 6,6 8,7 8,8 Cooperatives and Consortia 4,1 2,1 3,4 4,1 5,2 3,2 3,8 3,9 4,7 Controlled by Investment Funds/ PE 8,1 6,0-3,6 4,2 6,2-1,2-1,2 2,4 4,0 18

19 ROE dispersion in family firms The percentage of family firms with negative ROE is lower than that of 2007 Medium and large AUB family firms ,7 25,9 18, ,3 48,3 21,3 16, ,2 43,5 19,7 16, ,1 39,3 26,5 23,1 Minore < 0 di 0 Tra 0-10% 0 e 10% Tra 10-20% e 20% Maggiore > 20% di 20% Small AUB family firms ,2 46,2 23, ,6 45,8 19,5 20, ,5 43,5 17,2 19, ,8 20,7 26,5 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% < Minore 0 di 0 Tra 0-10% 0 e 10% Tra 10-20% e 20% Maggiore > 20% di 20% 19

20 Debt ratio in medium and large firms Even in 2015 there is a decreasing debt trend both in family and in non-family firms Leverage (*) 8,0 7,5 7,0 6,5 6,0 5,5 5,0 4,5 4,0 Non-family Familiare Familiare Family 7,7 7,3 7,4 7,5 7,1 7,1 6,9 6,7 6,5 6,0 5,6 5,4 5,3 5,4 5,5 5,2 5,1 4, Non-Family (>50) Cooperatives and Consortia 11,3 10,0 10,9 10,8 10,1 10,5 10,5 11,1 9,8 Coalitions 8,4 7,0 7,0 7,0 7,0 6,4 6,4 5,9 6,2 Controlled by Investment Funds/PE 8,3 7,9 7,8 7,3 6,0 6,7 6,4 7,1 6,1 State or Local Authorities 8,1 8,5 8,0 7,5 7,4 7,5 7,9 7,3 5,9 Branches of foreign companies 6,8 6,7 6,7 6,8 6,5 6,6 6,3 5,7 5,3 (*) Leverage= Total Assets/Equity (source: Aida). The ratio for non-family firms is a weighted average of the ratios of all firms with a non-family ownership structure. 20

21 Debt ratio in small firms In small companies the debt ratio is - on average points higher than in large companies, but a gap in favor of family firms still exists. Leverage (*) 8,5 8,0 7,5 7,0 6,5 6,0 5,5 5,0 8,0 7,8 7,5 7,6 7,6 7,5 7,4 7,8 7,2 6,4 6,7 6,7 6,5 6,5 6,5 6,2 5,9 Non-family Familiare Familiare Family 5, Non-Familiy (20-50) Cooperatives and Consortia 11,7 10,8 11,6 11,7 12,2 12,7 12,2 12,2 10,3 Coalitions 7,2 6,5 6,0 6,1 6,5 6,3 6,6 6,7 6,4 State or Local Authorities 7,2 8,5 8,5 7,5 7,5 7,9 7,6 7,0 6,0 Branches of foreign companies Controlled by Investment Funds/ PE 7,2 6,6 6,4 6,6 6,8 6,2 6,2 5,8 5,3 6,7 7,6 6,6 7,5 7,7 7,2 8,6 6,6 5,0 (*) Leverage= Total Assets/Equity (source: Aida). The ratio for non-family businesses is a weighted average of the ratios of all firms with a non-family ownership structure. 21

22 Debt level: variations in Net Fixed Assets and Equity Variations in Net Fixed Asset (*) Familiari Family AUB Familiari Family > AUB 50 >50 10,9% 11,1% 8,9% 8,1% 10,6% 8,7% 7,9% 7,3% 7,6% 8,3% 7,0% 6,0% 7,0% 6,8% Variations in Equity (*) Familiari Family AUB Familiari Family > AUB 50 >50 14,1% 13,0% 11,0% 12,3% 12,5% 12,1% 11,8% 12,2% 12,5% 10,9% 9,9% 9,0% 8,8% 8,8% (*) Source: Aida. 22

23 The ratio of bank debt is higher in state-owned firms and in those controlled by investment funds. Bank debt ratio >50 30,0 Bank debt / sales (%) 25,0 20,0 15,0 10,0 19,1 25,6 23,7 21,5 18,5 19,1 15,1 16,7 18,1 15,8 5,0 4,6 3,1 0,0 STATALI State O or ENTI LOCALE Local Authorities CONTROLLATA Controlled by Investment DA FONDI D'INVESTIMENTO/ Funds/PE PE FAMILIARE AUB Family AUB Firms COOPERATIVE Cooperatives O and CONSORZI Consortia COALIZIONE Coalitions FILIALE Branches DI MULTINAZIONALI of foreign companies 23

24 Debt repayment capability in medium and large firms From 2013 the gap between family and non-family firms in terms of capability to repay debt started to shrink NFP / EBITDA (*) 6,0 5,8 5,6 5,4 5,2 5,0 4,8 4,6 4,4 4,2 4,0 5,9 5,7 5,5 5,5 5,5 5,3 5,2 5,4 4,8 5,2 5,2 5,1 4,6 5,0 4,9 4,9 4,7 4,5 Non Non-family Familiare Familiare Family Non-Familiy (>50) Cooperatives and Consortia 7,5 7,4 6,9 8,7 9,3 8,9 8,1 8,4 9,3 Coalitions 4,5 4,7 5,6 4,8 5,1 5,9 5,7 4,9 4,7 State or Local Authorities 4,3 4,8 5,3 5,7 4,9 4,9 3,8 4,2 4,3 Branches of foreign companies Controlled by Investment Funds/ PE 3,4 3,8 4,1 3,5 4,1 3,7 4,0 3,8 3,4 5,0 7,6 6,9 5,6 6,0 4,8 5,1 3,8 3,1 (*) The ratio was calculated for all firms with positive values of NPF and EBITDA (source: Aida). The ratio for non-family firms is a weighted average of the ratios of all firms with a non-family ownership structure. 24

25 Debt repayment capability in small firms In smaller companies the gap between family and non-family firms in terms of capability to repay debt was closed in NFP / EBITDA (*) 6,5 6,0 5,5 5,0 4,5 4,0 6,1 5,8 5,8 5,8 5,9 5,4 5,7 5,7 5,0 5,5 5,4 5,4 5,1 5,1 5,2 Non-family Familiare Familiare Family 4, Non-Familiy (20-50) Cooperatives and Consortia 5,9 6,8 6,6 7,0 6,1 7,5 7,3 7,0 6,6 Coalitions 4,2 5,3 5,9 5,9 6,0 5,9 6,3 4,9 5,1 Branches of foreign Companies 4,7 4,3 5,3 4,7 4,6 4,7 3,7 4,5 4,6 State or Local Authorities 4,7 4,0 3,5 3,9 4,4 4,7 3,7 3,2 3,1 Controlled by Investment Funds/PE 6,1 4,6 8,3 5,5 6,7 3,7 5,7 3,0 3,0 (*) The ratio was calculated for all companies with positive values of NPF and EBITDA (source: Aida). The ratio for non-family firms is a weighted average of the ratios of all firms with a non-family ownership structure. 25

26 Firms with cash in excess and negative EBITDA Firms with cash in excess >50 % companies with NFP < 0 69% 67% Branches FILIALE of DI MULTINAZIONALE foreign companies 33% 34% COALIZIONE Coalitions 40% 36% 32% 30% 27% 30% 30% 26% COOPERATIVE Cooperatives and O STATALE State or O Local ENTE CONTROLLATA Controlled by DA FAMILIARE AUB Family AUB CONSORZI Consortia Authorities LOCALE FONDI Investment / PE Firms Funds/ PE Companies with negative EBITDA % companies with EBITDA < 0 11% 9% 9% 7% Branches FILIALE DI of COOPERATIVE Cooperatives and O IMPRESA foreign ESTERA CONSORZI Consortia companies >50 10% 7% 6% 6% 5% 4% CONTROLLATA Controlled by DA STATALE State or O Local ENTE Investment FONDI / Funds/ PE Authorities LOCALE PE COALIZIONE Coalitions 4% 3% FAMILIARE AUB Family AUB Firms 26

27 «Successful» family models

28 The selection criteria Starting from more than 7,700 family firms of the AUB Observatory with revenues exceeding 20 million, we identified 556 companies that show financial performance higher than their industry median with respect to three indicators*: Class of revenues: mln mln mln >250 mln Total Family Firms Criteria 1 CAGR Revenues > Industry Median Criteria 2 ROA > Industry Median Criteria 3 Debt/Equity < Industry Median 349 (7,0%) 106 (6,8%) 53 (7,2%) 48 (12,6%) 556 (7,2%) (*) For more information about the selection criteria of 7,707 family firms out of 10,391, see the methodological note. 28

29 «Successful» family models According to FsQCA method of analysis, family firms of the AUB Observatory were analyzed to understand whether and to what extent the 556 companies identified have adopted different models of governance*. The variables considered for identification of successful governance models are as follows: Leadership: family versus non-family manager; Openness towards non-family members : 100% family directors versus at least 1 non-family director; Leader s generation: first versus following ones; Leader s age: young (< 50 anni) versus non-young (> 50 anni); Business size : small (revenues < 50 mln ) versus medium-large (revenues > 50 mln ). (*) FsQCA (Fuzzy Set Qualitative Comparative Analysis): comparative qualitative analysis technique that uses algebra to implement comparative standards used in qualitative studies of macro-social phenomena. 29

30 «Successful» family models Combining the previous governance variables according to the "FsQCA methodology, three main successful models have been identified: Good Founder Close For the growth Leader s age NON-YOUNG - YOUNG Business size - SMALL MEDIUM-LARGE Founder YES - NO BoD CLOSE / OPEN CLOSE OPEN Leadership F F F / NF In the first generation companies, the founder fosters the company's success with any model of governance. In subsequent generations, the openness towards both Board and leadership positions as well as the younger leaders are able to favor growth. Success is also possible with a "closed" model towards non-family members, but only in business contests of limited size. 30

31 The 200 Benchmark family firms of the AUB Observatory

32 The selection criteria of 200 Benchmark family firms Starting from 556 family firms of the AUB Observatory with financial performance above the median of their industry, the best family firms within each size class have been selected as Benchmark*: Classes of revenues: mln mln mln >250 mln Criteria 1 CAGR revenues > threshold of the first 3 quartiles Criteria 2 AVERAGE ROA > threshold of the first 3 quartiles (*) For the list of the 200 Benchmark family firms, see the Appendix. 32

33 Benchmark family firms compared to the AUB Observatory Benchmark Osservatorio AUB Observatory AUB The performance gap between Benchmark firms and family firms of the AUB Observatory Cumulative growth(2007 = 100) 230,0 210,0 190,0 170,0 150,0 130,0 110,0 90,0 221,5 145, ROA 20,0 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 17,4 7,1 16,2 6,3 Benchmark 16,0 15,3 14,1 5,0 5,4 5,6 AUB Osservatorio Observatory AUB 15,3 15,6 15,7 14,8 5,0 5,5 5,9 6,0 Debt / Equity 3,0 2,5 2,0 1,5 1,0 0,5 2,6 0,4 Benchmark AUB Osservatorio Observatory AUB 2,0 2,0 2,2 2,0 2,0 1,7 1,8 1,7 0,3 0,3 0,3 0,3 0,2 0,2 0,2 0,2 0, ,

34 Benchmark family firms compared to the AUB Observatory Benchmark AUB Observatory Average age of firms 30,3 29,6 Location: - North West 42,4% 40,8% - North East 34,8% 29,6% - Center, South and Islands 22,7% 29,7% Manufacturing 56,5% 47,4% First Generation 41,7% 36,5% Sole director 18,5% 27,0% Joint Leadership 46,0% 37,2% % family directors 68,4% 72,9% Family Leadership 72,5% 76,3% Average leader s age 60,1 59,0 Average BoD s age 56,5 55,7 34

35 The distribution of Benchmark family firms by region 81.8% of the Benchmark firms is concentrated in the first 5 regions (+ 12.1% compared to the national average) 0,0% 30,8% 1,5% 20,7% 1,0% Benchmark AUB Observatory LOMBARDY 30,8% 31,3% 10,1% 11,6% VENETO 20,7% 14,0% 1,5% 8,6% 2,0% EMILIA-ROMAGNA 11,6% 11,2% 0,5% 2,0% PIEDMONT 10,1% 7,7% 0,0% 1,0% 0,0% 3,5% 3,0% 0,0% TUSCANY 8,6% 5,5% SOUTH AND ISLANDS 8,5% 12,0% 0,5% MARCHE AND UMBRIA 2,5% 4,0% LAZIO 1,0% 6,8% 1,5% 2,4 % 35

36 The top 10 provinces of the Benchmark family firms Province Benchmark AUB Observatory N % N % Milano 17 8,5% ,5% Brescia 11 5,5% 390 5,3% Bergamo 10 5,0% 266 3,6% Verona 10 5,0% 198 2,7% Padova 9 4,5% 220 3,0% Vicenza 9 4,5% 285 3,9% Bologna 8 4,0% 176 2,4% Torino 8 4,0% 286 3,9% Napoli 7 3,5% 247 3,3% Treviso 7 3,5% 202 2,7% 36

37 Age and generation of Benchmark family firms Benchmark Osservatorio AUB Observatory AUB 60,0% 50,0% 53,3% 50,1% 40,0% 30,0% 34,7% 28,9% 20,0% 10,0% 0,0% 10,5% 8,5% 10,5% 3,5% Molto Very Giovane young Giovane Young Adulta Longeva Long-lived Benchmark Osservatorio AUB Observatory AUB There are many Benchmark family firms even in second and third generation 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 41,7% 36,5% 47,7% 49,5% 10,6% 14,0% 0,0% Prima First Generation Generazione Seconda Generazione Generation Terza Third Generazione Generation 37

38 Industry breakdown 60% 50% 40% 30% 20% 10% 0% 57% 47% Manifatturiero Manufacturing 19% 17% Commercio Wholesale all'ingrosso Trade 9% Commercio Retail al dettaglio Trade 5% 7% 4% 4% 4% 3% 4% 6% 3% 3% 4% 1% 2% 3% 0% Altri Other Servizi Services Benchmark Servzi Business alle Services imprese Osservatorio AUB Observatory AUB Costruzioni Construction Commercio Vehicles Trasporti Transport & e Logistics autoveicoli logistica Energia Energy ed estrazione Finance Attivitàand Real estate finanziarie immobiliari The first three industries of Benchmark family firms are Food & beverage, Machinery and Electronics 18% 17% 16% 14% 15% 18% Benchmark Osservatorio AUB Observatory AUB 12% 11% 10% 11% 8% 8% 8% 6% 4% 4% 3% 4% 3% 6% 4% Alimentare Food e bevande & Meccanica Elettronica Prodotti in metallo Manifatturiero (altro) Sistema moda Chimico-Farmaceutico Mezzi di trasporto Mobile-arredo Gomma-plastica Carta-stampa Machinery Electronics Metallurgy Other Fashion Pharma- Means of Furniture Rubber- Paper- Beverage Manifacturing Chemical Transport Plastic Print 0% (*) Other manufacturing: i) tobacco; ii) repair, maintenance and installation of machinery and equipment; iii) manufacture of jewelry, musical instruments, sporting goods, toys and medical supplies. For further information, see the methodological note. 38

39 Level of internationalization A much higher number of Benchmark firms has become international through FDIs... 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% Benchmark Osservatorio AUB Observatory AUB 42,5% 28,5% 15,0% 10,0% ,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% % firms with FDIs 40,7% 30,1% 25,9% 23,5% 14,1% 36,5% 14,6% 14,6% Presente 1 Country in 1 Paese Presente 2-3 Countries in 2-3 Paesi Presente 4-6 Countries in 4-6 Paesi Presente Over 6 in Countries oltre 6 Paesi... doing business in a larger number of countries through FDIs Benchmark AUB Osservatorio Observatory AUB 39

40 Acquiror Companies A greater number of Benchmark family firms has undertaken external growth paths... 18,4% 12,1% % Acquiror Firms 13,5% 5,5% % Familiari Family Acquiror > 50 mln % Familiari Family Acquiror > 20 mln Benchmark Osservatorio AUB Observatory AUB 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Average number of acquisitions 4,0 1,7 Benchmark AUB Osservatorio Observatory AUB... making a number of acquisitions more than double the national average 40

41 Familiarity of leadership models The Benchmark family firms have more structured leadership models 50,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% Benchmark Osservatorio AUB Observatory AUB 46,0% 37,2% 27,0% 21,0% 20,4% 18,5% 14,5% 15,4% Amministratore Sole director Unico Presidente Executive Chairman Esecutivo AD CEO Singolo Leadership Joint leadership Collegiale 90,0% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Benchmark Osservatorio AUB Observatory AUB 76,3% 72,5% 16,0% 12,0% 11,5% 11,7% Modello Pure Family Pure Family Model Modello Mixed Model Mixed Modello Pure Outside Pure Outside Model and in many cases they are driven by family leaders 41

42 Degree of family involvement Boards of the Benchmark firms are slightly open towards nonfamily members 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% 42,3% 44,7% Benchmark but important differences emerge in terms of openness between first generation companies vs following generations 30,7% Osservatorio AUB Observatory AUB 34,6% 27,0% 20,8% Cda 100 Tutto % Family Familiare BoD CdA 50- Familiare 99% Family tra 50 BoD e 99% Cda Familiare Less than meno 50% del 50% Family BoD First Generation Following generations 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% 58,1% 53,0% 33,9% 31,3% 8,1% 15,8% Cda 100 Tutto % Family Familiare BoD CdA 50- Familiare 99% Family tra BoD 50 e Cda Familiare Less than meno del 99% 50% Family 50% BoD 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% 32,7% 40,7% 28,7% 36,1% 38,6% 23,1% Cda 100 Tutto % Family Familiare BoD CdA 50- Familiare 99% Family tra 50 BoD e Cda Familiare Less than meno del 99% 50% Family 50% BoD Benchmark Osservatorio AUB Observatory AUB Benchmark Osservatorio AUB Observatory AUB 42

43 M&A activities Size and experience are important

44 Representativeness of the AUB Observatory Acquisitions monitored by AUB Observatory account for 43% of all acquisitions carried out by Italian firms in the period * Total number of acquisitions in Italy Total number of AUB acquisitions *Source: KPMG - Report Mergers and Acquisitions,

45 Trend of acquisitions since 2000 After the sharp fall in acquisitions and J.V. of 2013, a slow recovery is undergoing in the Italian firms monitored by AUB Observatory Acquisizioni Acquisitions JV 45

46 The analysis concerns acquisitions and JV carried out by both family and non-family firms with revenues exceeding 20 million in the period % Acquirors* Acquirors Family firms Non family firms 5,5% 8,0% Non Acquiror Acquiror Non Acquiror Acquiror * The analysis is based on all operations of control acquisition (at least 50% of the target company or 100% in case of Joint Venture). 46

47 Acquisitions by company size The greater the company size, the higher the percentage of acquirors Family Firms N. Acquirors N. Companies % Acquirors N. Acquisitions Average N. Acquisitions Revenues ,0% 95 1,6 Revenues ,7% 223 1,7 Revenues ,3% 299 1,8 Revenues > ,0% 701 3,2 Total ,5% ,3 * The analysis is based on all operations of control acquisition (at least 50% of the target company or 100% in case of Joint Venture). 47

48 Size of the phenomenon OWNERSHIP STRUCTURE N. Acquirors N Companies % Acquirors Total N. acquisition % of total n. acquisition Average n. of acquisitions Family Firms , % 1, % 2.3 Non Family Firms 439 5, % 1, % 2.7 Controlled by Investment and P.E. Funds % % 2.9 State/Local authorities % % 3.9 Other Ownership Structures * % % 2.2 Coalitions % % 3.1 Branches of foreign companies Cooperatives and Consortia % % % % 2.8 Total 1,014 15, % 2, % 2.5 * Other Ownership Structure: Controlled by Banks + Foundations + Public companies 48

49 Frequency of acquisitions More than half of the firms made only one acquisition in the period ,2% 55,5% Family Familiare Firms Non Family Non Familiare Firms 18,9% 17,6% 12,3% 6,6% 6,6% 3,8% 3,0% 2,5% 6,1% 4,9% 3,9% 2,3% 1 acquisizione Acquisition 2 Acquisitions acquisizioni 3 Acquisitions acquisizioni 4 acquisizioni Acquisitions 5 acquisizioni Acquisitions Tra e 10 More Più di than 10 Acquisitions acquisizioni 10 acquisizioni Acquisitions 49

50 Geographic location of target companies Family firms show a greater propensity to cross-border acquisitions 65% 35% 55% 45% 73% 27% Acquisizioni Acquisitions Italia Italy-Italy su Italia Acquisizioni Acquisitions Italia Italy-Abroad su Estero Italia** Italy** Familiari* Family Non Non Familiari* family Firms* Firms* Cultural Distance Family firms have made acquisitions in countries with greater cultural distance after the crisis *** 0,95 1,15 0,98 0, FAMILIARE FAMILY FIRMS NON NON FAMILIARE FAMILY FIRMS * For purposes of comparison with the national data, it were considered only the 1,644 operations carried out during the period ** Source: KPMG Report Mergers and Acquisitions. *** The cultural distance of the target Country is based on the index of Hofstede, according to the definition proposed by Kogut and Singh (1988). 50

51 Diversification by Acquisitions A greater number of family firms has made acquisitions in different businesses since the beginning of the crisis Family Firms Non Family Firms 51,7% 44,5% 52,8% 51,7% 48,3% 55,5% 47,2% 48,3% Deal Acquisitions in business diversi* different businesses* Deal Acquisitions nello stesso in the business* same business* Deal Acquisitions in business diversi* different businesses* Deal Acquisitions nello stesso in the business* same business* * Acquiror and Target belong to the same business when the first 2 digits of the NACE code are the same. 51

52 Leadership models and openness of Acquirors Structured leadership models are most common in companies that carry out acquisitions 50,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% Acquiror Non Acquiror 44,5% 39,0% 36,5% 28,4% 19,1% 16,0% 11,8% 4,8% Amministratore Presidente Amministratore Leadership Sole Unico director Executive Esecutivo Chairman Delegato CEO Joint Collegiale leadership 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Acquiror 58,5% 35,3% 19,2% 19,1% Pure family Family & CdA closed chiuso BoD Pure Pure family Family & CdA & open aperto BoD Non Acquiror 45,4% 22,3% Mixed o Pure Outside Models of governance open towards nonfamily members are more common in companies that carry out acquisitions 52

53 Growth and operating profitability of family firms Firms that carried out more than one acquisition are those with the highest growth and profitability rates Cumulative growth (2007=100) Revenue Growth* Non Acquiror 1 1 Acquisizione Acquisitions Più More di 1 than Acquisizione 1 Acquisitions ROI 13,0 12,0 11,0 10,0 9,0 8,0 7,0 6,0 11,9 10,7 10,1 10,1 8,6 9,2 Profitalitity Rates* 11,1 9,8 9,7 8,4 8,2 7,8 7,4 7,0 7,4 7,7 6,7 6,7 9,0 7,2 6,9 9,2 8,1 7,8 8,6 8,0 8,2 Non Acquiror 1 Acquisizione Acquisitions Più More di 1 than Acquisizione 1 Acquisitions 5, (*) Only companies with a turnover exceeding 50 millions euros that carried out acquisitions in the period were considered in the present analysis. 53

54 Leverage and debt-repayment capability of Acquirors Firms that carried out more than one acquisition are those with greater capital strength PFN / EBITDA 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 Debt-repayment capability* 5,9 5,5 5,5 5,4 5,5 5,3 4,8 4,9 4,9 4,5 4,5 4,5 4,1 4,1 3,6 3,6 4,9 3,8 3,9 3,7 3,3 3,5 2,9 2,8 2,7 2,2 1,9 Non Acquiror 11 Acquisizione Acquisitions Più More di 1 than Acquisizione 1 Acquisitions ,0 6,7 Leverage* 6,5 Total assets / equity 6,0 5,5 5,0 4,5 4,0 3,5 3,0 5,4 3,9 5,6 5,5 5,4 5,2 4,7 4,5 4,3 3,8 3,9 5,5 5,5 5,0 4,9 5,2 5,3 4,8 4,5 4,9 4,2 4,5 4,2 4,4 3,8 3,7 Non Acquiror 1 Acquisizione Acquisitions Più More di 1 than Acquisizione 1 Acquisitions 2, (*) Only companies with a turnover exceeding 50 million that carry out acquisitions in the period were considered in the present analysis. 54

55 Internationalization via FDIs since 2001 * Branches of foreign firms have not been included in the population of Italian firms with a turnover exceeding 20 million.

56 Representativeness of the AUB Observatory Foreign direct investments (FDIs) carried out by the companies monitored by the AUB Observatory have risen from 23,164 in the previous edition to 25,933 of the current one, and represent 85% of all FDIs made by Italian companies* Foreign Direct Investments Reprint ** AUB Observatory Incidence of AUB Observatory FDIs ,9% Overseas revenues (for FDIs owned by at least 50%) 457,0 (mld euro) (mld euro) 79,6% * Foreign direct investments refer to all foreign investments in which Italian firms hold at least 10% of equity share. ** Italia Multinazionale 2015: Foreign Italian Investments and Foreign Investments Abroad in Italy 56

57 Foreign Direct Investments 28% of AUB companies has carried out at least one FDI* Family firms implement an internationalization strategy through FDIs to a greater extent than non family firms 26,8% 71,4% 79,7% 73,2% 28,6% 20,3% Familiari FAMILY FIRMS Non Familiari NON FAMILY FIRMS Azienda Firms with con FDIs IDE Azienda Firms without senza IDE FDIs Aziende Firms with con FDIs IDE Aziende Firms without senza FDIs IDE (*) Foreign direct investments refer to all foreign investments in which Italian companies hold at least 10% of equity share. (source: Orbis). Holdings of mono-business groups and firms controlled by multi-business groups were excluded from the analysis. 57

58 FDIs and company size The medium and large firms show a greater propensity to internationalize than small firms Family Firms N. Firms with FDIs N. Firms % Firms with FDIs Revenues ,3% Revenues ,0% Revenues ,4% Revenues > ,3% Total ,6% Non Family Firms * N. Firms with FDIs N. Firms % Firms with FDIs Revenues ,9% Revenues ,1% Revenues ,2% Revenues > ,6% Both large and small family firms are more internationalized than non-family ones Total ,3% * Branches of foreign businesses have not been included in the population of Italian firms. 58

59 FDIs and Ownership Structure Firms controlled by Investment / PE funds are the most internationalized Conversely, cooperatives and consortia are those with a lower propensity towards internationalization through FDIs WITH FDIs IDE WITHOUT NO IDE FDIs Controlled by Investment and CONTROLLATA DA FONDI / PE P.E. Funds 51,3% 48,7% COALIZIONE Coalitions 30,3% 69,7% Family FAMILIARE Firms 28,6% 71,4% Other ALTRI Ownership ASSETTI PROPRIETARI Structures * 15,7% 84,3% STATALE State/Local O ENTE authorities LOCALE 9,8% 90,2% Cooperatives COOPERATIVE and O CONSORZI Consortia 8,3% 91,7% (*) Controlled by Banks + Foundations + Public companies 59

60 Geographic location of family firms 2 Macro- Areas 23% 1 Macro- Area 49% 3 Macro- Areas 13% 4 Macro- Areas 6% 5 Macro- Areas 5% 6 Macro- Areas 2% 7 Macro- Areas 2% 1 geographic Macro-Area N % Western Europe ,3% Eastern Europe ,5% North America 127 5,8% Asia 130 5,9% Africa 61 2,8% Central or South America 56 2,5% Middle East and Oceania 23 1,0% Total ,9% 2 geographic Macro-Areas N % Western and Eastern Europe 134 6,1% Western Europe and North America 99 4,5% Eastern Europe and another macro-area (different from 74 3,4% Western Europe) Western Europe and Asia 51 2,3% Western Europe and another macro-area (different from the 60 2,7% ones previously listed ) North America and Asia 41 1,9% Macro-areas combination different from the ones listed 45 2,0% above Total ,9% geographic Macro-Areas Western Europe, Eastern Europe, North America (and other macroareas) Western Europe, North America and other macro-areas (different from Eastern Europe) Western Europe, Eastern Europe and other macro-areas (different from North America) Macro-areas combination different from the ones listed above N % 165 7,5% 140 6,4% 123 5,6% 99 4,5% Total ,9% 60

61 Internationalization period ,3% 0,2% 0,9% 0,7% 6,1% 6,2% 8,4% 6,9% 7,0% 8,3% 7,7% 9,9% Over 1/3 of family firms went international through FDIs after the crisis of ,4% 4,9% ,9% 7,5% ,0% 3,7% ,6% 8,1% ,2% 11,2% ,8% 11,4% ,0% 3,9% ,7% 3,6% 11,8% 13,8% Prima Before del ,5% 6,3% Non Familiare family firms Familiare Family firms 61

62 Geographic diversification Il grado di diversificazione geografica di tutte le aziende Almost 1/3 of Italian companies is present with FDIs in more than 3 countries Presente in 1 Country Paese Presente in in Countries Paesi 30% 41% Presente in more più di than 3 Paesi 3 Countries 29% COOPERATIVE O CONSORZI Cooperatives and Consortia 61,9% 20,6% 17,5% Other ALTRI Ownership ASSETTI PROPRIETARI Structures * 54,4% 24,6% 21,0% STATALE O ENTE LOCALE State/Local authorities 48,5% 18,2% 33,3% FAMILIARE Family firms 41,4% 29,8% 28,8% Controlled CONTROLLATA by Investment DA FONDI / and PE P.E. Funds COALIZIONE Coalitions 33,3% 32,4% 19,6% 33,3% 47,1% 34,3% (*) Controlled by Banks + Foundations + Public companies 62

63 Geographic diversification and company size Medium and large family firms have the ability to manage multiple countries simultaneously than small ones. 55,3% 43,8% 29,1% 32,8% 27,1% 11,9% Presente in 1 Paese Presente in 2-3 Paesi Presente in più di 3 Paesi Present in 1 Country Present in 2-3 Countries Present in more than 3 Countries Piccole SMALL Medio-grandi MEDIUM/LARGE 63

64 AUB firms and FDIs Almost 80% of over 26,000 FDIs monitored by the AUB Observatory have been carried out by family firms Ownership Structure > 50 Total N % N % N % Family Firms ,7% ,0% ,3% State/Local authorities 15 0,4% ,2% ,8% Coalitions 362 9,8% ,1% ,7% Controlled by Investment and P.E. Funds Cooperatives and Consortia Other Ownership Structures * 91 2,5% 855 3,8% 946 3,6% 26 0,7% 299 1,3% 325 1,3% 32 0,9% 312 1,4% 344 1,3% Total ,0% ,0% ,0% (*) Controlled by Banks + Foundations + Public companies 64

65 Type of stake About 80% of FDIs are majority stake State-owned firms as well as cooperatives and consortia are the ones that more than the others hold minority stake 80% 16% 4% Maggioranza Majority Minoranza Minority Cooperatives COOPERATIVE and O CONSORZI Consortia 66% 9% 25% STATALE State/Local O ENTE authorities LOCALE 67% 6% 27% COALIZIONE Coalitions 76% 5% 19% Family FAMILIARE Firms 82% 4% 14% ALTRI Other ASSETTI Ownership PROPRIETARI Structures ** 85% 13% 2% Controlled by Investment and CONTROLLATA DA FONDI P.E. Funds / PE 90% 3% 7% (*) Controlled by Banks + Foundations + Public companies 65

66 FDIs by geographic location Since 2003 FDIs of family firms in Western Europe fell by 25 points, while Asia has grown by 10 points and North America by 8 points 100% 90% 80% 70% 60% 50% 3% 3% 4% 5% 5% 6% 6% 6% 7% 7% 7% 7% 7% 4% 6% 8% 6% 9% 10% 7% 11% 12% 12% 13% 14% 14% 14% 14% 7% 7% 8% 7% 9% 8% 8% 8% 10% 9% 9% 14% 10% 11% 9% 9% 9% 11% 15% 11% 12% 13% 12% 16% 13% 14% 15% 16% 17% 17% 17% 17% 17% 16% 16% 15% 15% 40% 30% 20% 65% 61% 55% 52% 51% 48% 47% 45% 42% 42% 41% 41% 40% 10% 0% Eastern North Central and South Europa Western Occidentale Europe Est Europa Nord America Centro e Sud America Asia Resto of del the Mondo World Europe America America 66

67 FDIs by geographic location The different portfolio of FDIs before 2001 and after the crisis of % 60% 58% 52% Family Firms 40% 20% 0% 70% 60% 50% 40% 30% 20% 10% 0% 33% 14% 16% 14% 17% 12% 16% 10% 5% 9% 9% 7% 10% 3% 5% 8% Western Europa Europe Europa Eastern Orientale Europe Nord North America Central Asia or South Centro Asia e Sud Occidentale America America 59% 51% 35% Prima Before del Dal Since % 18% 17% 11% 11% 13% Non Family Firms Resto del of the Mondo world 10% 13% 10% 12% 6% 4% 3% 6% 8% Western Europa Europe Europa Eastern Orientale Europe Nord North America America Asia Centro Central e And Sud Occidentale South America America Resto Rest del of Mondo the world Prima Before del Dal Since Rest of the World: Africa + Middle East + Oceania. 67

68 Leadership models and degree of family influence Structured leadership models are most common in internationalized companies through FDIs 50,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% Familiari AUB Family Osservatorio firms with con FDIs IDE Familiari AUB Family Osservatorio firms without senza FDIs IDE 44,5% 32,1% 33,9% 27,4% 14,7% 16,7% 17,3% 13,6% Amministratore Sole director Executive Presidente Chairman Amministratore CEO Joint Leadership leadership Unico Esecutivo Delegato Collegiale 70% 60% 50% 40% 30% 20% 10% 0% 62% 42% 30% 28% 21% 17% Pure family Family & CdA closed chiuso BoD Pure family Family && CdA open aperto BoD Mixed o Pure Outside Governance models open towards nonfamily members are most common in internationalized firms through FDIs Familiari AUB Family Osservatorio firms with con FDIs IDE Familiari AUB Family Osservatorio firms without senza FDIs IDE 68

69 Profitability and debt ratio of firms with FDIs Firms with FDIs are those with the greatest rates of profitability Ebitda Margin 13,0 12,0 11,0 10,0 9,0 8,0 7,0 6,0 5,0 11,8 7,6 10,1 9,8 9,9 9,3 6,9 6,9 7,0 6,6 9,2 6,3 9,5 9,7 9,8 6,6 6,6 6,8 4, Familiari AUB Family Osservatorio firms with con FDIs IDE Familiari AUB Family Osservatorio firms without senza FDIs IDE Leverage 9,0 8,0 7,0 6,0 7,9 6,8 6,6 6,6 6,8 6,7 6,4 6,1 5,5 and with greater capitalization 5,0 4,0 3,0 5,0 4,4 4,3 4,4 4,5 4,5 4,5 4,4 4, Familiari AUB Family Osservatorio firms with con FDIs IDE Familiari AUB Family Osservatorio firms without senza FDIs IDE 69

70 The firms of the «Elite» program An over-performing sample 70

71 Elite firms Starting from the 260 Italian firms registered in the "Elite" program of the Italian Stock Exchange, the firms included in the AUB Observatory are 202 * Ownership Structure Elite AUB Observatory N % N % Family firms ,0% ,3% 2 3 Non family firms 42 21,0% ,7% Total ,0% ,0% Region with less than 10 Elite Companies 2 2 Region with Elite Companies Region with more than 20 Elite Companies 5 (*) The above number does not include the companies joint the "Elite" program on 4 th November (**) In gray the regions in which there are no firms included in the Elite program. 71

72 Growth and operating profitability The Elite firms have grown almost twice than the average in the period Revenues Growth* 200,00 180,00 160,00 140,00 120,00 100,00 80,00 185,9 145,5 100, Familiari Elite Family Elite Familiari AUB Family AUB firms firms ROA 8,5 8,0 7,5 7,0 6,5 6,0 5,5 5,0 4,5 8,0 8,0 8,1 7,9 7,8 7,8 7,6 7,4 6,5 7,1 6,3 5,9 6,0 5,6 5,4 5,5 5,0 5, and recorded, on average, a ROA of 30% higher than the national average Elite Familiari Family Elite firms Familiari AUB Family AUB firms (*) Cumulative growth (100 in base year 2007), calculated on the basis of sales revenues growth rates (source: Aida). Cumulative growth for nonfamily firms has been calculated as the weighted average of sales revenue growth rates of non-family firms with different ownership structures. 72

73 Leverage and debt repayment ability The NFP/EBITDA ratio of the Elite firms is about half the national average in PFN/EBITDA * 6,5 6,0 5,5 5,0 4,5 4,0 3,5 3,0 2,5 5,7 6,0 5,7 5,7 5,8 5,4 5,3 5,0 4,5 3,1 4,4 3,6 3,5 3,3 3,2 3,0 3,1 2, Leverage* 8,0 7,5 7,0 6,5 6,0 5,5 5,0 4,5 4,0 3,5 3,0 7,4 5,7 6,3 4,8 6,1 6,1 4,4 6,3 4,2 4,3 6,1 3,7 5,9 5,6 3,8 3, Familiari Elite Family Elite firms Familiari AUB Family AUB firms Familiari Elite Family Elite firms 5,2 3,6 Familiari AUB Family AUB firms... and the leverage ratio is 30% lower than the national average (*) The ratio was calculated for all firms with positive values of NFP and EBITDA (source: Aida). The NFP / EBITDA of non-family firms is a weighted average of ratios of all firms with a non-family ownership structure. (**) Leverage = Total Assets / Equity (Source: Aida). The leverage ratio of non-family firms is a weighted average of ratios of all firms with a non-family ownership structure. 73

74 Leadership and generation models The Elite companies have more structured leadership models... 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% Familiari Elite Family AUB Family Elite Osservatorio AUB firms firms 38,6% 36,9% 27,4% 29,7% 20,7% 19,9% 15,7% 11,0% Amministratore Sole director Unico Executive Presidente Esecutivo Chairman AD CEO Singolo Leadership Joint leadership Collegiale 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Elite Family AUB Family Aziende firms Elite Osservatorio firms AUB 48,3% 46,8% 40,6% 37,2% 14,5% 12,6% Prima First Generazione generation Seconda Second Generazione generation Terza Third generation Generazione... and they are driven in a similar way to what happens in the rest of the Country by leader of first, second and third generation* (*) The comparison with the AUB Observatory includes only companies not belonging to the ELITE program. 74

75 Family leadership and board members The percentage of family leaders in the Elite firms is in line with the national average... 90,0% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Familiari Elite Family AUB Family Elite Osservatorio AUB firms firms 76,6% 70,3% 17,2% 11,8% 12,4% 11,6% Modello Pure Family Pure Model Family Modello Mixed Model Mixed Modello Pure Outside Pure Model Outside 50,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% 45,2% Familiari Elite Family AUB Family Elite Osservatorio AUB 42,6% firms firms 34,0% 31,0% 26,4% 20,8% 100 CdA % Tutto Family Familiare BoD CdA 50- Familiare 99% Family tra 50 BoD e 99% CdA Less Familiare than 50% meno Family del BoD 50%... while BoDs of Elite firms show greater openness towards non family directors * (*) The comparison with the AUB Observatory includes only firms not belonging to the ELITE program. 75

76 Leader s age and performance A smaller percentage of Elite firms is led by leaders over seventy * 21,4% 25,1% 34,5% 28,2% 26,9% 24,3% 17,2% 22,4% < Over 70 e oltre 70 Familiari Elite Family Elite Osservatorio AUB Family AUB firms firms Revenue growth 190,0 180,0 170,0 160,0 150,0 140,0 130,0 120,0 110,0 100,0 90,0 177,0 141,0 100, ROI 12,0 11,0 10,0 9,0 8,0 7,0 6,0 11,5 11,5 10,4 10,0 10,0 9,8 10,5 9,4 9,2 9,0 8,1 8,0 8,4 7,7 7,3 7, Leader Young Giovane leader Leader Senior Senior leader Leader Young Giovane leader Leader Senior Senior leader (*) The comparison with the AUB Observatory includes only firms not belonging to the ELITE program. 76

77 The Elite firms are more likely than the national average to undertake paths of growth through acquisitions Acquirors Family Elite 21,9% Family AUB ** 5,3% 78,1% Acquiror Non Acquiror 94,7% Acquiror Non Acquiror Non family Elite 26,2% Non family AUB ** 7,9% 73,8% Acquiror Non Acquiror 92,1% Acquiror Non Acquiror (*) The analysis is based on all operations of control acquisition (at least 50% of the target company). (**) The comparison with the AUB Observatory includes only firms not belonging to the ELITE program. 77

78 The presence abroad through FDIs* About two-thirds of Elite firms have internationalized through IDEs, against a national average of 28% ** di piccole Small dimensioni size 51,8% 19,9% 63,4% % firms with FDIs 27,9% Familiari Elite Elite Family con firms IDE Familiari AUB AUB Family con IDE firms with FDIs with FDIs di Medium medio-grandi large dimensioni size 70,8% Familiari Elite con IDE Elite Family firms with FDIs Familiari AUB con IDE AUB Family firms with FDIs 43,4% Level of internationalization 25,0% 50,0% 43,5% 35,1% 31,5% Familiari Elite Family Elite con firms IDE with >50 Familiari AUB AUB Family con firms IDE >50 FDIs >50 with FDIs >50 14,9% Familiari Elite Family Elite firms con IDE with FDIs Present Presente in in 1 Country Paese Present Presente in in Countries Paesi Presente in in 44 o or più more Paesi Countries Familiari AUB Family AUB firms con IDE with FDIs (*) The analysis is based on all foreign investments with a share greater than 10% (Source: Orbis). (**) The comparison with the AUB Observatory includes only firms not belonging to the ELITE program. 78

79 Familiarity of leadership and BoD The Elite firms with FDIs have more structured leadership models Familiari Elite Family Elite firms con IDE with FDIs 15,1% 5,4% Familiari AUB Family AUB con firms IDE with FDIs 15,2% 13,5% 35,9% 27,0% 43,5% 44,5% Amministratore Sole director Unico Executive Presidente Chairman Esecutivo AD CEO Singolo Joint Leadership leadership Collegiale 21,8% Elite Family firms Familiari Elite con IDE with FDIs 34,2% Familiari AUB Family AUB firms con IDE with FDIs 42,5% 37,9% 35,6% 27,8% and show a board that is more open towards non family members * 100 CdA % Family Familiare BoD CdA 50- Familiare 99% Family tra 50 BoD e 99% CdA Less Familiare than 50% meno Family del BoD 50% (*) The comparison with the AUB Observatory includes only firms not belonging to the ELITE program. 79

80 Family holding companies * Groups with only one level perform better * Special thanks to Mrs. Carolina Marton, graduated at Bocconi University in the a.a

81 Family holding companies: the numbers Among the family firms monitored by AUB Observatory with revenues higher than 50 million, approximately 49% has (at least) one holding company*. The percentage of firms with an holding company increased of about 14 points between 2000 and ,0% 48,0% 46,0% 44,0% 42,0% 40,0% 38,0% 36,0% 34,0% 32,0% % firms with an holding company 45% 44% 43% 40% 40% 41% 42% 42% 37% 38% 38% 39% 35% 36% 36% 49% 74% 73% 73% 72% 72% 71% Incidence of firms with an holding company 73,2% 71,5% 30,0% % %% of Dipendenti employees %% of Fatturato revenues (*) Legal entity who controls a company, namely with a percentage of shares (i) exceeding 50% in unlisted companies (ii) exceeding 25% in listed companies. 81

82 The detail of control structures Nearly 80% of firms are controlled by one holding level. GARRONE FAMILY BOROLI AND DRAGO FAMILIES PRADA FAMILY 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 78,4% 17,6% 3,2% 0,8% 1 LIVELLO LEVEL 2 LEVELS LIVELLI 3 LEVELS LIVELLI 4LEVELS LIVELLI Simple structure Articulated structure Complex structure 82

83 The different profitability of groups 6,00 5,50 5,3 5,4 Profitability of groups 5,2 5,00 4,50 5,3 4,6 4,8 4,8 GRUPPI SIMPLE SEMPLICI GROUPS ROA 4,00 3,50 4,2 4,3 4,1 4,3 3,8 GRUPPI ARTICULATED ARTICOLATI GROUPS 3,00 2,50 3,4 3,0 3,0 GRUPPI COMPLEX COMPLESSI GROUPS 2, Tipo di gruppo Δ ROA 2010 Δ ROA 2011 Δ ROA 2012 Δ ROA 2013 Δ ROA 2014 Simple groups 0,19 1,25*** 0,66*** 0,73*** 0,61** Articulated groups 0,01-1,02*** -0,41** -0,45** -0,39* Complex groups -1,05-1,80** -1,52** -1,73** -1,35 ROA values show that different group configurations have superior (+) or inferior (-) performances of x points compared to the population and that this data is statistically significant, with: *** High significance(p<.001) ** Medium significance (p<.01) * Low significance (p<.10) 83

84 The first 100 industrial groups with an holding company (from EXOR to Edelweiss Energy Holding)

85 The first 100 industrial groups with an holding company Geographical area (holding s headquarters) SOUTH AND ISLANDS; 2,0% ABROAD; 4,0% CENTRE; 21,2% NORTH-WEST; 44,4% NORTH-EAST; 28,3% Legal form of the holding 66,7% Group s diversification* 2,0% 2,0% 5,1% Monobusiness 27,3% 2 Business 2,0% 4,0% S.P.A. S.R.L. S.A.P.A. SOCIETA' FOREIGN ESTERE COMPANIES 90,9% 3 Business 4 Business (*) The level of diversification has been verified comparing, within each group, the industries of the first-level subsidiaries. 85

86 The ownership structures of the first 100 family groups THE OWNER FAMILY 1 LEVEL 2 LEVELS 3 LEVELS 4 LEVELS FIRST LEVEL HOLDING SECOND LEVEL HOLDING THIRD LEVEL HOLDING FOURTH LEVEL HOLDING PARENT COMPANY FIRST LEVEL HOLDING SECOND LEVEL HOLDING THIRD LEVEL HOLDING 68,7% PARENT COMPANY FIRST LEVEL HOLDING SECOND LEVEL HOLDING 20,2% PARENT COMPANY FIRST LEVEL HOLDING 9,1% PARENT COMPANY Mean AUB: 2,0% 78,4% 17,6% 3,2% 0,8% 86

87 The first 100 family groups with an holding company Distribution by revenues (of the group) Distribution by employees (of the group) 36,8% 35,8% 28,4% 24,7% 20,0% 20,0% 18,9% 4,2% 4,9% 6,2% <1 MLD 1-1,5 MLD 1,5-2,5 MLD 2,5-5 MLD >5 MLD Meno > di Oltre > Holding s employees trend 70,0 60,0 62,0 53,7 52,0 50,0 40,0 35,3 37,9 35,9 40,8 38,3 30,0 20,0 10,0 0,

88 A comparison between the first 50 family groups now and in 2010 The activities performed by the holding Possesso Holding of di partecipazioni shares Concessione Subsidiaries di finanziamenti funding alle controllate 83,0% 100,0% 100,0% 85,0% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% The number of levels 69% 49% % 20% 12% 9% 2% 2% 1 LIVELLO LEVEL 2 LEVELS LIVELLI 3 LIVELLI LEVELS 4 LEVELS LIVELLI Employees of the holding Servizi Support di supporto services * 34,0% 50,0% Other Altri services servizi ** 5,0% 24,0% (*) Support services: data processing, administrative and computing services, advisory (particularly in the technical, industrial, commercial and research sectors) (**) Other services: commercial and marketing activities, research and development, goods and services production (Source: Annual reports). 88

89 Leadership models Leadership models in the holding and in the parent companies More than 3 CEOs Più di 3 AD 1,1% 3,2% Holding Società Parent company capogruppo 3 AD 3 CEOs 4,2% 9,7% 21,1% 30,5% 2 CEOs 2 AD 15,8% 17,5% Joint Leadership 1 CEO AD singolo 40,0% 54,5% Executive Chairman Presidente Esecutivo 11,0% 27,4% Amministratore Sole director Unico 3,9% 11,6% 89

90 Leaders role and characteristics Holding s leaders are often in the leadership (41,9%) or in the Board of Directors (33,8%) of the parent company. The role of the Holding s leader in the parent company 40,0% 35,0% 30,0% 25,0% 27,7% 33,8% 24,3% 20,0% 15,0% 14,2% 10,0% 5,0% 0,0% Sole leader Leader singolo One of the leaders (in the team of CEOs) Uno dei leader (del team di AD) Un membro del CdA Member of the BoD Non presente Not present 35% 30% 32% 25% 20% 15% 10% 14% 8% 15% Holding Società Parent capogruppo Company 5% 0% Female Donna Founder Fondatore 90

91 Leader (*) Family leadership When the holding s leader is a family member it is more likely that he/she is also present in the parent company (as leader or as BoD member). HOLDING Family (75,8%) Not family (24,2%) PARENT COMPANY Leader (*) (46,1%) Director (34,8%) The leader is a family member (11,3%) Not present (19,1%) The leader is not a family member (42,6%) Leader (*) (27,3%) Director (30,3%) The leader is a family member(18,2%) Not present (42,4%) The leader is not a family member (54,5%) (*) The leader, or one of the leaders in case of joint leadership. Family joint leadership has been defined as at least one of the CEOs belongs to the controlling family. 91

92 The Board of Directors (1/2) Family members in the BoD (*) Holding Parent Company 58,4% 27,4% Average number of directors: Family members Non family members 5,1 6,9 (*)The familiarity of the BoD s members has been established according to the surname affinity with that of the controlling family. Therefore, data may be underestimated. 92

93 The Board of Directors (2/2) 57% of parent companies have a Board of Directors with at least 1/3 of its members in common with those of the holding s BoD (the % decreases to 47% if we consider only family members). The control exercised by the holding on the parent companies through the presence of directors in the BoD * Consiglieri Family Common familiari Directors comuni 7% 15% 25% 40% 14% Common Consiglieri Directors Comuni 12% 20% 25% 34% 10% Intero Whole CdA BoD Oltre More il than 50% 50% Dal From 50% 50% al to 33% Meno Less than del 33% Nessuno None (*) Calculated as the ratio between the number of parent company directors which sit in the BoD of the holding company and the total number of parent company directors. 93

94 A European comparison The first 100 family firms listed in Italy, France and Germany.