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Transforming from a Family Business to a Business Family: De Agostini Group

A large Italian firm, De Agostini Group evolved successfully from its traditional cartography business into a diversified, leading-edge conglomerate with a global presence. The family accomplished this by professionalizing its corporate and family governance and a careful preparation of the next generation family members to become responsible owners.

After almost 100 years in the publishing and printing business, the third-generation family leader Marco Drago set the family firm on a radical new course, which included globalization and diversification across media and communication, gaming, and financial services to create a powerhouse, with entities listed on three different stock exchanges.

The Group was established in 1901 by cartographer Giovanni De Agostini under the name “Istituto Geografico De Agostini.” In 1919 it was purchased by partners Marco Adolfo Boroli and Cesare Angelo Rossi, who kept the original name of the business. In 1946, Marco’s two sons, Achille and Adolfo Boroli, consolidated De Agostini in the Boroli family’s hands. In 2018, the group belonged to over 60 family shareholders, all direct descendants of Marco Adolfo Boroli (3rd to 5th generation), bearing mostly the last names Boroli and Drago. Their control of the De Agostini Group is organized through B&D Holding S.p.A., their family holding company.

The Group, headquartered in Novara and Milan (Italy) operates internationally through 8 fully owned subsidiaries in UK, USA, Europe and Japan. In 2020, despite the challenges created by the spread of Covid 19, they were able to strengthen their Management Platform operations, increasing their combined Assets Under Management (to €23.8 billion). They achieved revenues of €101 million (36.6% growth) and the Net Result jumped to €20.4 million (+66%). The group is one of the biggest family-owned businesses in Italy and internationally.

During two decades, the single-family business was transformed by Marco Drago into an investment family with four major business sectors:

  • De Agostini Editore, their legacy Publishing business and fully owned by the Drago-Boroli family.
  • Media & Communication, with activities in broadcasting, content production and distribution for television, new media and cinema through JVs. It is listed on the Madrid Stock Exchange.
  • Gaming & Services: De Agostini held a 50.6% stake in IGT (International Game Technology), the largest global player in the gaming and services sector. It is listed in New York Stock Exchange.
  • Financial Services: It has activities in private equity, alternative investments (DeA Capital Alternative Funds) and real estate (DeA Capital Real Estate), is listed on the Milan Stock Exchange.

The group’s expansion and diversification got accelerated due an important liquidity event in 2000 that enabled the Group to take advantage of the windfall to venture into exciting new territories.

With its participation in the privatization of Seat Pagine Gialle (Yellow Pages), it was sold to Telecom Italia for a more than 7 times multiple. “The money we earned on the Yellow Pages were invested wisely: half of it was devoted to diversify the portfolio”, said Lorenzo Pellicioli, non-family CEO of De Agostini.

“We believe that running a business means creating value. Always keen to seize the opportunities offered by evolving markets, De Agostini has, by combining tradition and innovation, successfully expanded and reinvented itself while at the same time staying true to the founding principles of a family business.” “Our key strategy is to invest in activities which, by size and geographical diversification, allow us to maintain a sustainable competitive advantage that translates into strong financial performance. Currently, we plan is to consolidate our current portfolio of activities, while at the same time focusing on a sound financial structure, targeted expansion in areas where we can achieve excellence, investment using a total return approach, and full transparency towards all our stakeholders”. - Marco Drago, Chairman De Agostini S.p.A.

The group is a classic example of an enterprising family that transformed itself through dynamic mergers, acquisitions, partnerships, rebranding and divestments with cumulative investments of €16 bn and divestments of €8 bn. The business transformation also called for fundamental changes to the family structure and governance.

10 Key Takeaways from De Agostini Family:

Driven by his entrepreneurial spirit Marco Drago used the liquidity to intensify the diversification of the business portfolios, progressively marginalizing the legacy business in the overall family portfolio.

They proved to be savvy investment managers by entering various industries outside of their core business.

The family’s identity and purpose did not get limited by the identity and scope of their legacy business. Rather, it got redefined to a larger goal of creating value for their shareholders and communities through the family brand. The family values anchored this transformation strongly.

It involved a mindset transformation from “Owner Operator” to “Steward” mindset. In the 1990s, 15 out of 19 third generation members held managerial positions in the business. However, they recognized that it became vital to attract top caliber professional managers to operate the business, therefore they relinquished their executive roles in the business and assumed new roles as responsible owners.

In 2006, the chairman and the CEO roles were split, and the first non-family CEO was appointed.

Family members had to be educated for their new roles as responsible owners, often without operational responsibilities. Career services provided advice about opportunities within and outside the firm. Most of them agreed while 2 members were not in agreement, hence, they elected to sell their shares to other family members. A clear “Charter of Values of De Agostini Group Shareholders” was developed and published, and the “De Agostini Academy” was set up.

Comprehensive tools were put in place to address the concerns of the next generation, including clear employment policies and career services. Of 44 fourth generation members, only 5 worked in the business in 2018, after being selected by the Succession Implementation Committee.

The committee also selected and invited high potential NxG members to participate in the Strategy Lab, an original forum to stimulate discussions and reflections around key strategic decisions and involving (in an informal setting) key executives, such as the chairman and CEO, top non-family managers from the operating companies and senior thought leaders.

The family interest got represented by the Holding company, whose board included all four family branches as well as independent directors. The family placed strong emphasis on the autonomous management of the various portfolio businesses, with a central, coordinating role played by the De Agostini board, composed of family members, the non-family CEO and independent directors.

Regular annual get-togethers ensured that family unity and cohesion was maintained.

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