nFashion dealmaking is back in full swing. Lower interest rates and the prospect of a business-amiable Trump governance have unleashed a torrent of deals. While most have been small, it raises hopes that buyers will next set their sights on big start-ups and heritage brands long rumoured to be in the market.
Kapital, True Religion and Bonpoint are among the brands that have recently changed hands. More deals are almost certainly on the horizon, perhaps including Versace, which owner Capri Holdings is reportedly shopping around after its own sale to rival Tapestry was blocked by the Biden administration. Among start-ups, intimates label Skims and activewear maker Vuori are at the front of the pack. Both have multi-billion-dollar valuations and have been waiting for the right moment to hold their initial public offerings.
When that moment will come is the big mystery. The improving habitat for dealmaking is a double-edged sword; interest rates are ticking lower and valuations are ticking upward, but that means it often still makes sense for a brand to hold out for a better offer, unless its investors are pressuring for an immediate sale.
“I don’t want to be the guy to sell when there’s 4 percent interest rates. I’m going to be the guy that sells when there’s 1 percent interest rates.” said Sean Frank, chief executive of Ridge Wallets. The accessories brand is a tempting acquisition target: it generated $200 million in sales and $50 million in net profits last year, and has no outside investors.
“Still, if we get an offer for the right price, I’m down to sell it to somebody,” Frank added.
With the most desired brands holding out for a more favourable environment, investors expect the deals in 2025 will feature companies in need of a cash infusion to either reach a new level of growth or simply survive. There’s a potential for more public market brands to go private, a continued uptick in licensing firms acquiring distressed independent labels and consolidation among profitable start-ups that won’t wait for valuations to increase.
“It’s only a matter of time before would-be sellers don’t want to hold out any longer and they want to take their moment,” said Brent Vartan, managing partner at investment firm and creative agency Bullish, which backs early-stage brands like activewear label Bandit Running and skincare start-up Bubble.the Business of fashion breaks down the types of acquisition targets the industry will likely see this year and the unique stakes guiding their potential deals.
Public Market Buyouts
Table of Contents
While the industry awaits the public market debuts of high-growth brands like Skims, Vuori and Shein, for a bevy of floundering public companies, this could be the year they’re taken private.
The next wave of buyouts for struggling firms is already underway.In December, the Nordstrom family enlisted Mexican retailer El Puerto de Liverpool to take their department store chain private. That activity could accelerate as a league of unprofitable public companies face mounting pressure to find buyers.
Key Acquisition Targets in 2025
| Category | Examples | Potential Buyers |
|—————————-|———————————-|——————————-|
| heritage Brands | Versace, Kapital, True religion | Luxury conglomerates, private equity firms |
| Start-ups | Skims, Vuori | Strategic investors, venture capital firms |
| Distressed Labels | Independent brands in need of cash | Licensing firms, private equity |
| Public Market Buyouts | Nordstrom, other struggling public companies | Private equity, family offices |
The fashion industry is poised for a transformative year in mergers and acquisitions. With a mix of heritage brands, high-growth start-ups, and distressed labels on the market, the stage is set for a flurry of deals that could reshape the landscape. As interest rates continue to fluctuate, the timing of these transactions will be crucial. Whether it’s a heritage brand like Versace or a high-growth start-up like Skims, the right deal at the right time could define the future of fashion.
The Shifting Landscape of E-Commerce: From IPOs to Acquisitions
The e-commerce landscape has undergone significant transformations since the IPO boom of 2021. Brands like Allbirds, Figs, and ThredUp, which once rode the wave of public offerings, are now grappling with declining sales and shrinking cash reserves. These companies, once darlings of the stock market, have seen their shares plummet more than 50% below their IPO prices, with cash on hand dropping over 30% year-over-year. Allbirds narrowly avoided de-listing with a stock split in August 2023, highlighting the precarious position of these once-thriving businesses.
Despite these challenges, private equity firms and strategic buyers see potential in these struggling brands. In December 2023, Figs received a takeover bid from Story3 Capital Partners, signaling a trend of private equity stepping in to rescue faltering e-commerce players. This isn’t a new phenomenon; in 2023,Coupang saved Farfetch from near-bankruptcy,while Poshmark was acquired by Naver in 2022,and Casper was bought by Duration Capital Management in 2021.
Heritage and Indie Brands Find New Homes
The acquisition trend isn’t limited to e-commerce giants. Established heritage brands like Christian Lacroix, Laura Ashley, and Thomas Pink have also changed hands recently. In December 2023, CP Brands Group acquired Thomas Pink, while WHP Global snapped up Vera Wang. Analysts suggest that more heritage labels,such as Jimmy Choo and Versace,could be next,as their current owner,Capri,reportedly looks to offload these brands.
younger brands are also attracting attention. Tomorrow, a london-based brand accelerator, has started selling some of its labels, including A-Cold-Wall and Machine-A. However, the stakes are high for emerging brands, as evidenced by the closure of Matches in March 2023 and the bankruptcy of roksanda, which was later rescued by The Brand Group. Other cult labels like Y/Project and Dion Lee weren’t as blessed, shuttering after failing to find buyers.
What Buyers Are Looking For
Buyers aren’t just snapping up distressed brands for bargain prices. They’re seeking brands with strong customer loyalty and the potential to weather economic downturns. As Eli Yedid,CEO of CP Brands Group,put it,“The ones that don’t have brand dilutions are the ones I take most seriously. You have to really be meaningful. Even if it’s distressed, I don’t think it’s an automatic buy.”
Midsize Brands: The Sweet Spot for Acquisitions
While larger start-ups with over $100 million in sales wait for favorable valuations, smaller brands with annual sales between $50 million and $100 million are becoming attractive targets. These brands often lack the cash to fund expansion efforts like opening new stores or international distribution centers. Instead of raising venture capital and diluting their equity, manny are turning to acquisitions as a path to growth.
Key Takeaways
| Trend | Examples | Key Players |
|——————————-|—————————————|————————————-|
| E-commerce IPOs faltering | Allbirds, Figs, ThredUp | Story3 Capital Partners, coupang |
| Heritage brand acquisitions | Christian Lacroix, Laura Ashley, Vera Wang | CP Brands Group, WHP Global |
| Emerging brand sales | A-Cold-Wall, Machine-A | Tomorrow, The Brand Group |
| midsize brand consolidation | Brands with $50M-$100M in sales | Private equity firms |
The e-commerce and retail sectors are in a state of flux, with once-prominent brands now seeking new ownership to revive their fortunes.Whether it’s heritage labels, emerging designers, or midsize brands, the common thread is the search for stability and growth in an increasingly competitive market. As buyers continue to sift through the wreckage of the IPO boom, the brands that can demonstrate resilience and customer loyalty will be the ones to watch.Menswear Brands Embrace Mergers to Navigate Valuation Challenges and Expand Market Reach
In a rapidly evolving retail landscape, menswear brands are increasingly turning to mergers as a strategic move to overcome valuation hurdles and strengthen their market presence. Rather than pursuing outright sales or acquisitions at lower-than-desired valuations,brands with revenues in the mid-range are seeking partnerships with similarly sized companies that share complementary audiences but aren’t direct competitors.
Take, as a notable example, Mizzen + Main, a menswear label renowned for its form-fitting, wrinkle-resistant dress shirts. According to a source familiar with the matter, the brand is actively exploring opportunities to acquire a like-minded company. this approach allows brands to pool resources, reduce operational costs, and enhance their expertise without the pressure of cash transactions.
A prime example of this trend is the merger between Billy Reid, a CFDA-award-winning menswear label, and Knot Standard, a digitally native custom suitmaker. The two brands joined forces in April 2023 to expand their retail footprint and bolster their made-to-measure offerings. By combining operations,they were able to cut costs,improve margins,and leverage each other’s strengths. Importantly, this merger eliminated the need for cash transactions, as the companies exchanged assets for equity in the combined entity.
“Deal structuring plays a really big role,” said Fan Bi, CEO of e-commerce holding firm The hedgehog Company. “If brands have realistic price expectations, they can still sell because instead of the buyer giving you cash, maybe they’ll give you stock of the combined entity.”
This strategy not only addresses valuation concerns but also fosters collaboration between brands with shared goals.By merging, companies can tap into new customer bases, enhance their product offerings, and create a more resilient business model in an increasingly competitive market.
Key Benefits of Mergers for Menswear Brands
| Benefit | Description |
|—————————-|———————————————————————————|
| Cost Efficiency | Combined operations reduce overhead and improve margins. |
| Market Expansion | access to new customer segments and retail footprints.|
| Valuation Adaptability | Asset-for-equity exchanges eliminate the need for cash transactions. |
| Expertise sharing | Leveraging complementary skills and knowledge. |
As the menswear industry continues to evolve, mergers are proving to be a viable solution for brands looking to navigate valuation challenges and achieve enduring growth. By partnering with like-minded companies, brands can unlock new opportunities and position themselves for long-term success.
For more insights into the latest trends in the fashion industry, explore how Billy Reid and Knot Standard are redefining menswear through their innovative merger.
Here’s a summarized and structured version of the given text, focusing on the key trends and actors in the fashion and e-commerce mergers and acquisitions landscape:
Fashion and E-commerce M&A Landscape in 2023:
- Heritage Brands and Luxury Players:
– Brands: Versace, Kapital, True Religion, Nordstrom
- Potential Buyers: Luxury conglomerates, private equity firms
– Notable Deal: WHP Global acquired Vera Wang in December 2023
- High-Growth Start-ups:
– Brands: Skims, Vuori
– Potential Buyers: strategic investors, venture capital firms
– Notable Deal: None yet in 2023
- Distressed Labels:
– Brands: Independent brands in need of cash
– Potential Buyers: Licensing firms, private equity firms
– Notable Deal: Story3 Capital Partners proposed acquisition of Figs in December 2023
- Public Market Buyouts:
– Brands: Struggling public companies like Nordstrom
– Potential Buyers: Private equity, family offices
– Notable Deal: None yet in 2023
E-commerce M&A Transformations:
- IPO struggled and private equity intervention:
– Brands: allbirds, Figs, thredup
– Buyers: Private equity firms and strategic buyers
- Notable Deals:
– Story3 Capital Partners proposed acquisition of Figs
– Coupang saved Farfetch from near-bankruptcy in 2023
– Naver acquired Poshmark in 2022
– Duration Capital Management bought Casper in 2021
- Heritage and indie brands finding new homes:
– Brands: christian Lacroix, Laura Ashley, Thomas Pink, A-Cold-Wall, Machine-A
– Buyers: CP Brands Group, WHP Global, Tomorrow, The Brand Group
- Notable Deals:
– CP Brands group acquired Thomas Pink
– WHP Global snapped up Vera Wang
- Mid-sized brands: The attractive targets:
– Brands: Emerging and growing brands with sales between $50M – $100M
– Buyers: Private equity firms
– Notable Deals: Multiple ongoing consolidations in this sector
