Italy’s Del Vecchio and Trump: The perfect contrast on how dealmakers go about their business
What we know about deal making in both the public and private sectors is that the alliances and deals that work best are those that last
It is not often that history presents a neat compare and contrast opportunity but serendipity dealt its hand last week with the completion of continental Europe’s biggest ever merger, valued at some €50 billion. A couple of days later this was followed by another dealmaker being inaugurated as the 45th President of the United States.
It is undeniable that Donald Trump, who boosts endlessly about his deal making skills, is better known than Leonardo Del Vecchio, Italy’s richest man, who shuns publicity.
Last week Del Vecchio finalised a merger joining Luxottica, his eyeglass frame making company, with France’s Essilor, the world’s largest lens manufacturer. The combined company will have 140,000 employees in 150 countries and will dominate the global eyewear and visual health market.
Luxottica hardly has global name recognition in the manner of all things Trump but it’s a fair bet that you will be familiar with some of Luxottica’s brands such as Ray-Ban and Sunglass Hut.
Del Vecchio’s son, incidentally, owns Brooks Brothers, so despite their low profile the Del Vecchio family clearly is a big player in the world of luxury brands. However they focus on the success of its businesses, as opposed to the family behind them. Compare this with the attitude of America’s Egoist-in-Chief, and draw your own conclusion.
So, what other comparisons are telling? First and foremost the massive European merger tells us something about the art of the deal, something that Trump ‘modestly’ says he does better than anyone else.
The problem is that his vision of a deal is one of winners and losers, occasionally he concedes that both sides should benefit but more often he describes deals as a zero sum game with only one winner.
The Luxottica/Essilor merger stands in stark contradiction to this approach because, aside from the obvious symmetry of the two businesses, investors in both companies greeted the deal with enthusiasm, boosting the share price of both listed entities. This provides a strong basis for an enduring relationship.
Trump has a history of falling out with his business partners and many of his ‘famous’ deals have ended in acrimony and disappointment. Somewhere in this talk of deals it seems to be forgotten that the deal itself is no more than a starting point of a relationship; what really matters is what flows thereafter.
Del Vecchio’s business history is testament to his understanding of how this works because a key to the company’s growth has been the strategic alliances formed with a number of luxury brands which have spawned deals with other brands, and so on.
Maybe the low profile Del Vecchio avoids the limelight because, unlike Trump who boosts endlessly about how he made his fortune, his Italian counterpart genuinely started from scratch and is all too aware of what it is like to have nothing.
He was raised in an orphanage from the age of seven and entered the world of work as an apprentice toolmaker. Trump, on the other hand, not only grew up in a world of privilege but also got his start as an entrepreneur with a lavish gift of funds from his father.
It is unwise to generalise too much in these matters but businesses founded by genuine rags-to-riches entrepreneurs tend to be more grounded than those started by rich kids.
The key difference being that they take a lot less for granted and lack that sense of entitlement, which often makes these rich kids so insufferable.
So, Del Vecchio is the real thing and, although he has a large family, he is not going down the route of nepotism in finding a successor to run the business; in fact he has already decided that succession in his companies will be provided by professionals with proven ability. Trump, appears to believe that nepotism works best not just in his companies but also in the sphere of public office.
The new president has staked a lot on his bragging about an ability to make deals that will benefit the United States. He may pull some of this off but early signs are that he views deal making as war by other means. It is highly questionable whether this will benefit the average Joe in America who, Trump claims, to be at the centre of his concerns.
What we know about deal making in both the public and private sectors is that the alliances and deals that work best are those that last, if one party feels cheated or somehow disadvantaged by what they have agreed they most certainly will not come back for more and most likely will have made an agreement that will struggle to come to fruition.
Actually everyone with half a brain understands this, which begs the question…
Steven Vines runs companies in the food sector and moonlights as a journalist and broadcaster