M&A Activity Follows Strong 2014 with an Even Stronger 2015

Fueled by a very strong second quarter, M&A in the Toys & Giftware sector in 2015 significantly outperformed 2014. The year saw robust interest from strategic and financial acquirers across multiple industry subsectors, including collectibles, education, games/puzzles, construction, vehicles and juvenile products. Intrepid believes that this momentum will continue in 2016 based on favorable underlying conditions, an abundance of debt and equity capital, success of contentdriven products, major players’ interest in continued growth through acquisitions and the overall sentiment that we picked up in our on-going industry conversations.

Sector highlights include:

  • According to NPD Group, U.S. retail sales of toys grew by almost 7% in 2015;
  • Nine of the 11 key sub-sectors grew in 2015, highlighted by games/puzzles and vehicles (both up approximately 10%);
  • Deal volume in 2015 increased 25% from 2014 (see page 2 for details);
  • Public company valuation multiples remained strong in 2015, exceeding the industry average over the prior 5-year period;
  • Private equity continued to roll up smaller brands to form larger platforms for future acquisitions.

The year is off to a good start—we believe the best is yet to come in 2016!

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