The Italian Interim Market.
Overview of the Industrial Sector
In respect to similar-sized economies, Italy has a large proportion of small-medium enterprises and a lesser number of global multinational corporations. The manufacturing sector is often focussed on high quality and often niche products, rather than competing on quantity.
In the Northwest, there are large industries in machinery, automotive, aerospace production and shipbuilding. In the Northeast and the Center, there are enterprises specialized in clothing, leather products, footwear, furniture, textiles, food, machine tools, spare parts, home appliances, and jewellery. Finally, in the less-developed South, the two forms exist side by side.
About 85% of Italian economic activity is managed by family-owned businesses and the presence of the family plays a decisive role in the Italian industry.
The Interim Management Market
Family-owned SMEs with revenues between 2M€ and 50M€ engage 70% of Interim Managers, usually on direct contracts. The duration of the contracts is reasonably long and greater than 6 months for 75% of the projects. The Italian public sector and the service sector IM markets are so small as to be insignificant.
The largest sales channel for Interim Management in Italy is through the personal networks of the Interim Managers and a recent survey of Interim Managers sets this at 74% of sales volume. It is impossible to accurately quantify the sales volume but the best estimate in 2019 was 113 Million €*.
In comparison to more mature IM markets, a smaller percentage of business goes through specialized Interim Management providers, only 15%. These providers traditionally serve the small number of larger corporations and have limited business with the majority of family-owned SMEs.
It is estimated that 1434 Interim Managers are active in Italy, but again the calculation error is significant*. In respect to Nothern European countries, in Italy a higher percentage of Interim managers operate at the top management level (60% at C-level), which is a reflection of the larger proportion of SMEs.
The top 5 functional interests are general management 27%, finance 13%, operations 12%, sales 10% and turnaround/re-structuring 8%.
A distinguishing feature of the Italian IM market is that part-time IM contracts are normal practice for 60% of interims and this service is particularly appreciated by the SMEs. The majority of Interim Managers consider the part-time business as being the same or better than full-time contracts in terms of profitability, day-rates and revenue.
As stated in the introduction, many Italian businesses are family-owned and many of these are already involved in a family succession or will be facing one soon. In 2019 it was estimated that over 30% of family businesses were driven by entrepreneurs of 70 years old or over. This is an important growth market for Interim Management and managers must be equipped with soft-skills to deal with complex human situations.
Jonathan Selby
References
*Assumptions for market calculations: Financial reports 2019: total revenue of IM providers was 17 M€.
*Assumptions for market calculations: Leading Network surveys 2019: providers counted for 15% of IM sales, Interims declared an average daily rate of 672€ and 56% average saturation.
Wikipedia “Economy of Italy”.