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Few people know as much, firsthand, about U.S.�Italian relations as Bruno Cova, Fiat S.p.A.’s general counsel. Because of the auto giant’s joint venture with General Motors Corporation, he straddles both worlds. For that, and other reasons, Cova’s job has been particularly challenging lately. Fiat has gone through changes in management, painful divestitures and restructuring, and has weathered the death of its honorary chairman, Gianni Agnelli. And that’s on top of reporting losses of nearly $5 billion last year. Corporate Counsel executive editor Anthony Paonita interviewed Cova in May. The GC talked about Agnelli, the cultural divide between Americans and Italians, and the way the aging of the auto magnate’s postwar industrialist generation is changing Italy’s business climate. Corporate Counsel: Gianni Agnelli’s death seems to symbolize the passing of the postwar “miracle” generation. What does that mean for businesses? Bruno Cova: Generational change has been an issue in Italy, especially with medium-sized firms. Some have been successful, and family members have stepped up to the challenge of taking them over. In other cases, [those businesses have] been unable to find successors; they’ve had to resort to hiring professional managers. CC: Speaking of finding successors, in talking to lawyers and executives in the United States, they’ve told me about U.S. � Italian cultural differences they’ve encountered. Specifically, when negotiating deals, Americans tend to stick to the business at hand, while Italians prefer that the parties get to know one another better. Do you find that’s true? BC: In Italy we certainly value personal relationships, and it is important, when negotiating a deal with Italians, to try and create some empathy. This will greatly improve the chances of a successful deal. CC: So is it true that, in acquiring Italian companies, there’s more hand-holding, and that Americans need to appreciate the emotional attachment that owners feel toward their businesses? BC: The vast majority of successful Italian small and midsized enterprises (SMEs) were established in the boom years of the fifties and sixties by bright gentlemen. They worked hard to build up a company � often from very humble starting points, like [famed exotic carmaker] Enzo Ferrari’s garage, and were followed by their children, some of them good [kids], some rather bad. Therefore, the owners of many Italian SMEs are still the children and grandchildren of the founder. The company has been the family’s livelihood for two or three generations, and there is a deep sentimental attachment to it. Making sure that the sellers are relaxed about selling their company (“We value your father’s legacy, we will not change the name of the company, we will ensure that your family’s faithful employees will not be terminated, we want to offer you the position of honorary chairman,” etc.) will take care of their guilty feelings. These feelings are often exploited by the unavoidable members of the family who do not want to sell. This takes time [for U.S. suitors] � and, more importantly, thought. CC: The SMEs that are likelier to survive and prosper are those dealing with prestigious, fashionable items. The commodities producers seem to be under more pressure, especially now that they have to compete with Asian and Eastern European producers. Do you agree? BC: Absolutely. Italy has historically been a country of great craftsmen. This is what we do well, in many industrial sectors (for example, Ferrari and Lamborghini cars, fashion houses, jewelry, etc.), while we are not as good as other countries in large-scale manufacturing. In this regard, the aging infrastructure and government red tape certainly play an important role. The devaluation of the lira, oftentimes used to restore competitiveness to Italian products, is no longer an option, following the introduction of the euro. Clearly, the way of doing business in Italy is getting closer to the way it is done in the U.S. But there is still a long way to go, particularly in SMEs.

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