We took record of lots of them ahead of 2020. Yet, since the pandemic outbreak, we have been (almost) losing count. In fact, the acquisition chess game does not only look endless, but also keeps reviving frenziedly therefore leading to buyout, merger and incorporation deals which are rather unpredictable at times. After all, as pointed out by financial analysts, a large amount of current assets is ready to be invested. An extremely large amount
There is a trend which has never stopped. In fact, it has been going on like that for ages: there is nothing new about it at present. More specifically, we are talking about an endless acquisition chess game. Yet, despite their traditional enduring over times, in the last pandemic months, more than ever, such M&A deals, also known as Mergers & Acquisitions, have been running after each other and increasing, and keep redefining the organization of the supply industry.
Please note that we are talking about the whole fashion & luxury industry supply chain, from upstream supplying up to downstream sales and distribution networks, either physical or digital. That is for sure: this acquisition chess game is going to continue further on. Yes, indeed, it will go on and on.
The acquisition chess game
Over the last few months, the financial shopping turnover turned out to be frenzied. It reached extremely high points as some deals have been closed successfully: among others, the one that has led Tiffany under the control of LVMH (for the time being, this is the richest M&A deal in the luxury segment).
Acquisitions and mergers have been consistently and repeatedly going on throughout 2020. And as emphasized by a lot of financial analysts, have been speeding up in 2021, which is bound to be the umpteenth “year of acquisitions”.
In other words, lots of deals have been already signed, and many more are potentially going to take place. The reasons why such trend is running this way are quite clear. They have been put forth and explained by PWC, which consider acquisitions as a valuable tool to create and safeguard the value of the buying business.
On top of that, such transfer deals help companies that are bought out to change their own business model. That is why, commented analysts while speaking to Italian newspaper MFFashion, “a strategic choice, in the luxury segment, will also affect vertical and horizontal integrations across the value chain”. Looking into the whole scenario, pointed out PWC while focusing exclusively on the made in Italy market, investments funds are playing an increasingly relevant role.
In fact, in 2020 they exceeded 60% of estimated transaction deals. Consequently, made in Italy production and its supply chain look particularly appealing to the world of finance.
The “865” factor
865 is not a number randomly assigned. In fact, it is the number of billions of dollars which are supposedly ready to be invested by private equity funds while playing such acquisition chess game.
EY have estimated these figures to prove that 2020, which was appalling to the whole humankind, has turned (it comes as no surprise) into a golden season to the benefit of investments companies.
After the amazing performance achieved by VF Corp, which bought out Supreme, and L Catterton, which acquired Birkenstock, all players are eager now. “Talks and deals are as hectic as ever – commented David Bassuk, co-leader of Alix Partners, while speaking to WWD –. All players were waiting and see how the world would be after the pandemic. It is the right time, now, to buy, reshape, and capitalize. There are lots of opportunities.” Considering the current merger-mania underway, we will find out more about them shortly.