Portofino. A hot summer weekend in 1990.
Pierino is the nickname Piero Ambrogio Busnelli, Milanese businessman who in 1966 founded B&B Italia, the upholstered furniture company, still goes by. Pierino has three children: Giorgio, Giancarlo and Emanuele. The eldest, Giorgio, was the one with him that morning. And he witnessed the handshake that launched the B&B Italia Marine joint venture between his company and Costa Crociere. Things have changed significantly since then. And not only for the Costa family (which sold to the American Carnival group in 1997), but also for the Busnelli's. Pierino is no longer at the helm of the company, although he remains an energetic 85-year-old who still freely dispenses of his opinions. His children have taken his place.
First all three, but now just two, Giorgio and Emanuele. In fact, from 1990 to the present, B&B Italia has grown and diversified from home furnishings to those for hotels (such as the Hotel Bulgari in Milan and the Mandarin Oriental in Barcelona) as well as museums, including Palazzo Grassi in Venice. Leading the company is now Giorgio who, in 2003, in the heat of generational succession, decided to sell 51% of its capital to the Opera private equity fund. Sadly, this caused his brother Giancarlo to leave the firm, in disagreement over this sale. He dreamed of launching the company on the Stock Exchange (but this never materialized), resulting in a major disappointment.
But now, just a month ago, he decided to re-take control of the company that now has a turnover of 156 million euros and gross margin of 17.
Why in 2003 did you sell the majority holdings to a fund? And, above all, why did you buy it back?
We were in the thick of the generational succession. We didn't have a clear idea of the market and we thought that having a private equity fund could help us get where we wanted to be, quoted on the Stock Exchange.
Then I realized that being quoted on the Stock Exchange for a sector like ours, made up of small- and medium-sized companies, means entering into a war under-armed. The organizational costs of a company which has major stockholders, like that of a fund, within it, and which wants to go public, are very high and the controls are very strict and the reaction times slower. In the end, you find yourself at a disadvantage.
When did you decide to buy back everything?
In 2010, the fund was due to expire and had to sell its shares. And given the market situation, quoting the company was not even an option. We realized that we were at a crossroads: give up or start again, bringing everything back into the family. A sense of belonging and the realization that we could do it were part of the decision. Everyone together, including my brother Giancarlo who contributed to the operation without asking for anything in return. A shining example.
Is it true that in order to buy back control of B&B Italia you put down 60 million euros?
That is fairly close to the actual amount.
But, looking at it all, was selling to a private equity fund a mistake or not?
Not entirely. Today, our company is organized as if it were quoted on the market. But funds think in the short-term in which they squeeze the maximum potential out of a company. We are entrepreneurs and we think in the long-term. But I did make one mistake.
What was that?
I should have handed over only 49%, not 51%. But this is something you learn with hindsight.
For the Opera Fund, though, you were a good deal...
The best they could have hoped for, I would say. Our agreement earned them two-and-half times their initial investment.
How would you define B&B Italia?
A family management company. We have 18 managers, but corporate direction is in the family's hands.
Who's in charge?
I am. As president and CEO I follow personally the home division with the B&B Italia and Maxalto brands. My brother Emanuele is managing director, but follows the contract division for hotel, museum and cruise ship furnishings. Then there are my son Massimiliano who works in the research department, and my daughter Francesca, who is involved in sales for two foreign markets.
And now that you have retaken control, what is your strategy?
Return to investing in the long-term to bring B&B Italia back up to its 2011 turnover of 175 million euros. In the first three months of this year we have already grown by 15% and we will continue to invest 3% of our profits in research and development into leather, fabric, wood, metal and the technologies required to process them. We have just spent 4 million euros on the most advanced equipment in the world to process polyurethane foam.
Many Italian companies are ending up in the hands of foreign companies. Why is this?
Promoting "Made in Italy", means inventing it. And this takes money. But if it arrives from foreign companies who then create wealth in Italy, I don't see what the problem is.
Your sector is struggling to recover. What is the key to survival?
Investing in the product and brand name. And creating partnerships to emerge from the context of small-sized companies. Otherwise, groups like Ikea will always be at an advantage.
Do you have something against the Swedes?
Absolutely not. They are one of the best companies in the world.