The end of 2015 and beginning of 2016 saw an uptick in M&A activity for apparel and retail companies. In addition, Q4’15 witnessed several high-profile CEO changes at companies including Ralph Lauren and Iconix Brand Group. We believe that as wholesale brands continue to navigate through a challenging retail environment, more companies will turn to M&A as a method of gaining a stronger foothold in the marketplace.
We have seen a consolidation wave emerge among juniors and moderate apparel wholesalers. With the large department stores continuing to exert pressure on vendors for markdown dollars and returns, wholesalers are beginning to consolidate, as having a strong balance sheet is key to survival. Strong brands have continued to command premium valuations from both private equity groups and strategic acquirers. The top three value drivers for apparel and retail companies continue to include brand, Brand and BRAND!!!
In speaking to buyers, we also see an increasing focus on a company’s ability to connect with their consumers through a well-defined and implemented social media strategy.