| THE RISK RESET
ITALY
KEY TAKEAWAYS Not every distressed business is a failing business. Many Italian SMEs remain commercially strong but are under pressure from inflation and liquidity constraints. The focus must be on preserving viable businesses rather than managing insolvency. Culture can determine the outcome. Financial distress often develops gradually, but many businesses wait too long to solve the problem. Treating early warning signs as an opportunity to act will significantly improve restructuring prospects. The right structure can protect long-term value. Buyers are favouring flexible deal structures that preserve operations while limiting historic liabilities, with successful transactions balancing speed and compliance with the sustainability of the business.
A culture of early intervention
crisis settlement procedures and restructuring plans. These tools can help create a protected environment in which the business has time to reorganise and preserve value. Ultimately, the most effective mitigation strategy is cultural: management should treat early warning signs as an opportunity to intervene, not as a failure to be hidden. Q3 diligence priorities evolving amid regulatory scrutiny, tax considerations, and geopolitical changes? Transaction structures in Italy are becoming more cautious and risk- sensitive. Buyers are less interested in price or historical financial performance and far more interested in whether the business can withstand shocks and comply with increasing regulation while How are transaction structures and due generating reliable cash flows. This is especially important in distressed situations, where speed is often necessary but uncertainty is higher. As a result, there is greater use of asset deals, business-branch transfers, earn-outs, deferred payments, escrow arrangements, conditions precedent and stronger contractual protections. Buyers often prefer to acquire selected assets or business units instead of the entire company. This allows them to preserve
commercial value while reducing exposure to tax, labour, financial or regulatory risks. Due diligence priorities have also evolved. Reviews now focus more deeply on regulatory compliance, tax exposures, labour and social security liabilities, environmental matters, sanctions, supply chain risks, foreign investment screening, ESG issues and the reliability of financial forecasts. In Italy, tax due diligence remains particularly important because potential liabilities may arise from VAT, withholding taxes, corporate income tax, regional tax, tax credits, public incentives, transfer pricing and previous restructurings. Labour and social security matters also require careful attention, especially in transactions involving transfers of employees, collective bargaining agreements, accrued benefits or potential joint liability. In addition, geopolitical uncertainty has made buyers more attentive to sanctions, export controls, dependency on foreign suppliers, exposure to unstable markets and the resilience of the supply chain. The overall approach is more pragmatic and protective. Buyers seek certainty, while sellers, particularly in distressed contexts, often need speed, execution and limited post-closing exposure. Successful transactions therefore require close coordination between legal, tax, financial and operational advisors from the earliest stages. The goal is not simply to complete the transaction, but also to structure it in a way that protects value and gives the business a credible future after closing.
Tina Gullì Partner Studio Gullì
Q1 What trends are driving restructuring, distressed transactions, and deal activity in your jurisdiction? In Italy, restructuring and distressed transactions are being driven not only by financial pressure, but also by the need to preserve businesses that are often still commercially viable. Markets have not disappeared, but the economic environment around them has changed dramatically. Energy price volatility from geopolitical uncertainty, alongside higher financing costs, have placed considerable pressure on liquidity and working capital. This is particularly relevant for Italian SMEs, many of which are family-owned long-standing customer relationships. In these cases, restructuring is increasingly seen not merely as a crisis response, but as a way to protect going-concern value, employment and local economic ecosystems. Activity is especially strong in Northern Italy, particularly Lombardy, Veneto, Emilia-Romagna and Piedmont, where industrial and export-oriented businesses are concentrated. In Central and Southern Italy, distressed activity is more commonly linked to SMEs, tourism, real estate, construction and businesses that depend heavily on bank credit, public incentives or seasonal revenues. Delays in collections or reduced access to credit and changes in public incentive schemes businesses with strong industrial know-how, loyal employees and
have made some companies more vulnerable, even where the underlying business remains sound. As a result, deal activity is becoming more selective and solution oriented. Investors and creditors opt for structures that preserve continuity, safeguard jobs and maintain customer and supplier relationships. Business transfers, transfers of business branches, negotiated restructuring procedures and other tools under the Italian Crisis and Insolvency Code are being used to avoid unnecessary value destruction. The priority is to distinguish between businesses that are no longer sustainable and businesses that can recover if given the right financial and operational structure. Q2 What are the most common triggers during financial distress, and how can businesses mitigate these risks? Financial distress in Italy usually does not appear overnight. It often begins with small warning signs that may initially seem manageable: a supplier paid late, a tax deadline postponed, increasing reliance on overdraft facilities, slower customer collections or forecasts that prove too optimistic. Over time, these signals can develop into serious liquidity pressure, especially when management waits too long before addressing the problem.
The most common triggers include cash shortages, rising interest rates, declining revenues, higher operating costs, delayed payments from customers, excessive leverage and difficulty refinancing existing debt. Other triggers include the loss of important contracts, supply chain disruptions, tax and social security arrears, weak financial planning and dependence on a small number of customers or lenders. For many Italian SMEs, the real risk is not the trigger itself, but the delay in recognising its seriousness. Businesses can mitigate these risks by acting early and with transparency. Regular cash flow monitoring, realistic short-term forecasts, frequent management reporting and a clear understanding of margins by business line are essential. Companies should also monitor tax and supplier positions carefully, as these often provide early evidence of deteriorating financial health. Early communication with banks, creditors, suppliers, landlords and tax authorities can make a big difference. If stakeholders are approached before the situation becomes critical, it is often possible to negotiate payment extensions, revised repayment plans or new financing. Disposal of non-core assets and debt restructuring may also help stabilise the business. Where appropriate, companies should consider preventive restructuring tools under the Italian Crisis and Insolvency Code, including negotiated
Tina Gullì , born in Caracas, Venezuela, is an Italian Chartered Accountant, Legal Auditor, and Founder of Studio Gullì, based in Orbassano, near Turin, with an international presence in Dubai and New Jersey through Studio Gullì America. A native Spanish and Italian speaker with intermediate English proficiency, she specialises in tax consulting, corporate advisory, international taxation, extraordinary finance transactions, tax litigation, business valuation, and appraisal reports. Enrolled in the Order of Chartered Accountants of Turin since 2003 and in the Register of Legal Auditors since 2008, she also serves as Statutory Auditor for major Italian companies.
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Studio Gullì was founded on a simple principle: no business owner should feel alone when facing tax, corporate, and accounting matters. The firm stands alongside companies in both challenging times and periods of growth, helping transform compliance from a source of stress into a foundation of security, clarity, and trust. Studio Gullì supports entrepreneurs, CFOs, family-owned businesses, private clients, and foreign nationals with day-to-day advisory services and complex tax matters, both in Italy and internationally. Its expertise includes tax and corporate consulting,
accounting assistance, extraordinary transactions, international taxation, tax litigation, business valuations, and the drafting of appraisal reports in the context of corporate reorganisations, acquisitions, and extraordinary finance operations. With a local and international perspective, Studio Gullì empowers entrepreneurs to grow with confidence.
+39 339 542 5818 tina.gulli@studiogulli.eu irglobal.com/advisor/tina-gulli
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