ITALY Trends and Developments Contributed by: Paolo Balboni, Luca Bolognini, Giulio Monga and Carmine Antonio Perri, ICT Legal Consulting
ticularly where the buyer is a listed entity seeking alignment of incentives with sellers. Exit options for VC firms/investors VC-backed exits often take the form of partial or con- trolling-interest sales, enabling investors to exit fully or retain minority stakes to benefit from future growth. Full exits are still executed, particularly in highly regu- lated sectors or where strategic buyers acquire 100% of the business. Due diligence focus Due diligence has become increasingly rigorous, with technology-specific and regulatory considerations forming a critical part of the review process. Key areas include: • intellectual property (IP) – ownership chain, employee and contractor assignment, open-source compliance, licence grants, pending litigation, and freedom-to-operate analyses; • data protection and cybersecurity – GDPR com- pliance, cross-border data transfers, records of processing activities, historical breaches, and incident-response readiness; • cloud infrastructure, interoperability and data port- ability; • artificial intelligence – provenance and licensing of training data, model governance, bias mitigation, explainability, and alignment with the forthcoming EU AI Act (contracts typically include tailored AI representations and covenants); • commercial and operational readiness – SaaS/ hosting arrangements, uptime and service-level agreement (SLA) commitments, third-party cloud dependencies, and scalability of engineering teams; and • litigation or administrative procedures related to Escrow or holdback arrangements are standard, typi- cally 5–15% of consideration held for 12–24 months to secure indemnification for tax, employment, IP, or regulatory breaches. Representations and warranty insurance (RWI) is increasingly used in mid- and large-cap deals, pro- the above-mentioned matters. Post-closing risk management
viding both buyers and sellers with protection against long-tail liabilities, and facilitating a “clean exit”. Regulatory and Other EU/Italian Developments Competition and foreign investment control Large technology, telecoms, infrastructure, and gam- ing transactions are subject to EU merger review and Italy’s “Golden Power” rules (which consist of a set of special powers that the Italian government can exer- cise to protect national security and essential interests in strategic sectors such as defence, energy, transport and communications), particularly where national- interest assets are involved. Data protection and AI regulation GDPR enforcement remains central; the upcoming EU AI Act is shaping due diligence, contract drafting, and risk allocation in AI-based technologies. iGaming licensing reform The 2024 regulatory overhaul, which increased licence fees and tightened eligibility criteria, has prompted sector consolidation. Operators unable to meet the new standards have pursued acquisitions or mergers to maintain operations. Notable deals include Flutter Entertainment’s acquisition of Snaitech, reflecting the strategic need to consolidate regulated assets. Capital markets reforms and exit pathways The Capital Markets Bill and Euronext Growth Milan initiatives are improving public exit alternatives for tech companies, though trade sales remain the pri- mary route for VC-backed exits. Sectoral and tax considerations for spin-offs Tax-neutral spin-offs are possible if proportionality, valid business purpose, and shareholder allocation requirements are satisfied, providing flexible struc- tures for corporate restructuring or separating inno- vative business lines. Outlook for 2026 The outlook for 2026 is cautiously optimistic. Continuation of mid-market M&A activity is expected, particularly in regulated sectors like gaming, fintech and cybersecurity.
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