The year 2014 was a mixed bag for consumer goods and retail M&A. On one hand, the retail space experienced a string of billion dollar buyouts including Signet’s $1.4 billion acquisition of Zale’s Corp., Men’s Warehouse’s $1.8 billion purchase of Joseph A. Bank, and the $6 billion sale of Neiman Marcus to the Canada Pension Plan Investment Board. Conversely, aggregate private equity investments in B2C companies dropped from $107 billion in 2013 to approximately $95.2 billion in 2014. How will these trends impact the deal space for this year?
Merrill DataSite recently invited a panel of senior M&A experts to address this question and discuss the health of the consumer goods M&A sector and the outlook for 2015. Throughout the panel session, our guest experts shared their perspectives and insights regarding how today’s competitive M&A market has impacted the consumer goods and retail sector.
Based on our panelists’ observations, investor interest is alive and well in the consumer and retail space. Panelists cited the food, beverage and restaurants, health and wellness, personal health and consumer health sectors as the top performers. The weakest sectors cited were soft lines, apparel, broad lines and department stores. Companies gaining the highest valuations are those that are profitable, have a demonstrable path for continued growth, a solid e-commerce revenue stream, and a culture of innovation.
Both strategic and financial investors are actively looking for targets. However, panelists noted a trend of investor preference for larger deals, which may result in longer cycles for smaller companies seeking to sell. Additionally, activist investors are making waves in the retail space, as panelists noted in the examples of Signet Jewelers’ acquisition of Zales and the Men’s Warehouse acquisition of JoS. A. Banks.
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For access to the playback discussion: http://bit.ly/1MVkVdf