Half of retail M&A targets victims of retail environment
Analysis by Spayne Lindsay, a consumer industries financial advisory firm, shows that in the first seven months of 2012, there were just 33 transactions in the UK retail sector, one fewer than in the equivalent period in 2011.
Around half of the targets so far in 2012 had been adversely affected by the challenging retail environment compared with only 15% in 2011.
Jonathon Martin, Partner and Head of Retail at Spayne Lindsay, said,“Retailers including Blacks, La Senza, Bonmarché, Fenn Wright Manson, Jaeger, Aquascutum, Clintons and Robert Dyas have all struggled due to the continued economic strain on the consumer as well as the challenges of adapting to the rapidly changing world of ‘omnichannel’. The priority for the new owners of these businesses has been to address these challenges and attempt to reposition them for the new world in which they operate.”
Spayne Lindsay’s analysis shows that only two deals in 2012 to date have generated historical EBITDA multiples in double figures, both of which have seen strategic interest from an overseas buyer (Walgreen/ Alliance Boots and Wacoal/ Eveden).
Jonathon Martin said: “The best way to achieve a strong valuation in this market is to demonstrate differentiation, be it a unique brand proposition, leadership in a niche sub-sector, international footprint or excellence in multichannel retailing”.
He added: “With over 100 UK retailers, wholesalers and brand owners held in private equity hands and an increasing deal appetite from overseas retailers, one can’t help but feel that there are plenty of transactions waiting to be done”.
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