The pace of change for Europe’s companies continues to accelerate, and for many - especially during and after the financial crisis - change means selling important parts of the business.  To minimise the economic and social consequences of these divestitures, it is preferable to face them in the context of a clear strategy, rather than as unfortunate surprises undertaken in haste.

We are starting to see the growth of advisory companies dedicated to just these issues, and they can make difficult strategic events much less painful. 

These companies work with large corporations which have an excess of production capacity, and which are planning to sell all or part of a production facility.  They focus on reindustrialisation of the site: they look for new industrial businesses which are prepared to take over the plant and able to guarantee the continuity of the activity and the non-closure of the site, at least for a certain period of time.

Corporations approaching divestitures without a reindustrialisation programme normally charge the HR manager with reaching an agreement with the trade unions.  This typically involves long term negotiations and (often) industrial action, conflicts (which may also affect other production facilities), and reputational damage (which may also affect stock prices and relationships with the central and local public authorities involved).  The facilities, without machinery and personnel, are extremely hard to sell, and are only likely to be sold with very high discounts and heavy commissions paid to agents.

Reindustrialisation brings major benefits for all parties.  The disinvesting company will achieve cost savings which average 30 percent, fewer strikes, short-term termination of operations and a more positive image.  The incoming company will re-start production very quickly.  Employees are more likely to keep their jobs, and will receive support for re-qualification where necessary. 

SJ Berwin in Italy works with advisory companies to provide advice on the legal aspects of (i) the analysis of the business to be divested or acquired, (ii) analysis of the industrial site and area characteristics, (iii) analysis of the employees’ competences and conditions of re-employment, (iv) arrangements for an information memorandum, (v) identification of potential disinvesting or takeover companies, (vi) coordination and management of the disposal or acquisition process, (vii) negotiation of economic and contractual conditions, and (viii) negotiation with the trade unions and the central and local public authorities involved.

If you would like to receive further information, please contact Fabio Cigna in our Milan office.