It was altogether a lot of activity — especially for a time when economists were projecting recession and belt tightening.
Further, even if more expensive, access to debt financing is improving and would therefore expect sidelined financial sponsors to become increasingly more active. Scarcity of actionable opportunities have maintained elevated valuations, and buyers and sellers are utilizing creative solutions to bridge value gaps. I therefore expect luxury to continue to be fertile ground for M&A activity.It is a real paradox.
Strategics have been focused on organic growth as they have battled over an extended period of time. And brand management companies flourished and became the buyer of choice for many fashion brand businesses. These transactions range from tens of millions to billions of dollars. However, there are not that many sizable potential targets left. In addition, many small- to medium-sized companies are either struggling or not growing very fast. And many designer-owned companies may not want to lose their independence and become absorbed by a larger multibrand company.And the buy side is becoming concerned with the softening performance of the luxury industry post the pandemic-created bubble: slowdown in the U.S.