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Open the average press release of an Italian M&A operation announced over the past five years. The word “strategic” appears on average four times. Three in the body, one in the headline. “Strategic operation”, “strategic acquisition”, “strategic partnership”, “strategic investment”.
When a word appears everywhere, it has stopped meaning anything. It has become the rhetorical certificate of nobility attached to any decision one wishes to make appear deliberate. The reality observed in Italian executive committees — and which anyone who has sat on foreign investment committees confirms — is that most operations labelled strategic are not.
What “strategic” really means
A decision is strategic if it satisfies three conditions simultaneously:
- It structurally modifies the competitive position of the firm in its reference market (Porter, 1980, reformulated).
- It produces advantages not easily replicable by competitors — because based on proprietary assets, accumulated capabilities, or supply-chain configurations that are difficult to recompose.
- It is irreversible or hardly reversible within a 3-5 year horizon, thereby generating competitive commitment (Ghemawat, 1991).
Measure every Italian M&A operation announced as “strategic” against these three conditions. The majority fail at least two of the three tests. They are tactical operations (extending revenue), opportunistic (exploiting a price window), or identity-driven (responding to an ego or to internal consensus pressure).
These can also be good operations — but they are not strategic. And calling them strategic produces two harmful distortions: coherence checks that would be done on a simply tactical operation get skipped, and an internal narrative is created that becomes difficult to disown if execution fails. A narrative nobody inside the firm is tasked with attacking before the deal starts: this is where the cognitive contradictor asks to reverse the burden of proof — the one proposing has to demonstrate, not the one doubting.
Test 1 — Does the decision change the competitive position?
A strategic decision structurally modifies the way competitors must look at your firm. It opens new positionings, closes positionings to competitors, reconfigures the value chain in a defensible way.
The acquisition of an equal-size competitor, in itself, is not strategic. It is consolidation. It becomes strategic only if it produces capabilities that the equal-size competitor alone did not have (non-overlapping geography, complementary distribution channels, technologies integrable in a unique way).
The entry of a PE fund as a minority shareholder, in itself, is not strategic. It is financial. It becomes strategic only if the fund operationally brings competencies that the company would not have a way to acquire otherwise (international networks, vertical expertise, bolt-on add-on capabilities that mere capital availability would not provide).
The first test, applied seriously, deflates ninety percent of operations labelled strategic.
Test 2 — Is the advantage defensible?
Strategy means defensible commitment. If what you are about to do can be replicated by a competitor with EUR 50-100 million and 18-24 months, it is not strategy: it is a tactical move that the first serious competitor will neutralise.
Structurally defensible advantages in Italian M&A contexts are few:
- Heritage brand with genuine equity in premium segments (and almost never in B2B industrials)
- Distribution network capillary and hardly replicable for lack of equivalent territorial depth
- Regulatory or authorisation assets non-duplicable (concessions, licences, historic authorisation positions)
- Vertical proprietary know-how in niches with high technical barriers (fine chemicals, specialty pharma, certain precision mechanics)
- Supply-chain positioning with top clients tied through joint development contracts over 5-10 years
If the operation you are evaluating does not guarantee, after closing, at least one of these advantages improved relative to the pre-operation state, it is not strategic. It is tactical.
Test 3 — Is the decision truly irreversible?
Irreversibility is the subtlest and most important discriminator. A strategic decision produces internal switching cost such that going back is not only burdensome but definitively reconfigures the firm.
The acquisition that can be resold in three years without value loss is not strategic — it is a financial investment. The partnership that can be dissolved without operational damage is not strategic — it is a commercial arrangement.
The practical test is simple: ask management “what happens if in two years we want to reverse this decision?”. If the answer is “nothing serious, we pay some transaction costs”, it is not strategy. If the answer is “we cannot reverse it, we have changed organisation, capabilities, supply-chain partnerships”, then you are facing a decision that deserves the name.
Why Italian companies overuse the word
The overuse is not random. It responds to four specific internal functions.
- Rhetorical function toward the board — a strategic operation passes the board with fewer obstacles than a simply tactical one
- Rhetorical function toward banks — the strategic label supports higher leverage multiples and less stringent covenants
- Rhetorical function toward unions — a strategic operation justifies restructurings that an opportunistic operation would struggle to justify
- Identity function — the entrepreneur and management like to see themselves as strategic, not tactical, and press releases mirror this self-representation
The cost of these four rhetorical functions is high and deferred. When the strategic operation fails — and statistically most M&A produces value destruction for the buyer, according to Bain and McKinsey — the internal narrative built on strategicity makes it much harder to recognise the error and cut losses promptly.
A linguistic hygiene practice
A small discipline that makes a great deal of difference in the executive committees encountered: ban the adjective strategic in internal valuation documents, replacing it with the specific function of the operation.
Not “strategic acquisition of competitor X” but “acquisition of competitor X for regional consolidation and reduction of competitive price pressure”. Not “strategic partnership with fund Y” but “entry of fund Y to finance international add-ons over the next 36 months”. Not “strategic digital investment” but “EUR 12M investment in e-commerce platform with target of 8% of revenue at 24 months”.
The discipline of naming with precision forces measuring with precision. And it prevents the rhetorical mask that protects mediocre decisions from critical scrutiny.
FAQ
Do truly strategic operations exist in Italy?
They exist but are rare. They are distinguished ex-post by three converging traits: buyer’s competitive position permanently improved, new integrated capabilities not replicable by direct competitors, internal organisation reconfigured such that going back becomes operationally impossible. Historic examples: certain Italian banking consolidations of the 1990s, the internationalisation of some North-East industrial groups, supply-chain positioning in luxury post-2000.
How do you distinguish a strategy from a good tactic?
Tactics solve a problem within 12-24 months and can be replicated or reversed. Strategy configures the 3-7 year future and produces switching costs hardly reversible. Good companies make many excellent tactics and few strategies — not the inverse.
Why do management and the board often confuse the two levels?
For status asymmetry. Calling a tactical decision “strategic” elevates the decision (and whoever proposes it) in rank. Management is not incentivised to use the word “tactical” in its own documents — commercial advisors are not incentivised to use it in their press releases. The system produces rhetorical inflation.
What to do if “strategic” is used too much in one’s own board?
Introduce a documentation rule: every operation classified “strategic” in board materials must make explicit the three tests (modified competitive position, non-replicable advantage, irreversibility) with specific evidence. Operations not passing the three tests are reclassified as tactical or opportunistic. It is simple documentation discipline, and immediately produces a healthier distribution between real strategy and routine operations.
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