Increased private credit may drive affordable M&A transactions as luxury fashion conglomerates offload brands

Euan Rellie, the Managing Partner and Chairman of Consumer & Retail at BDA Partners, recently spoke to Octus about the current state of mergers and acquisitions (M&A) in the luxury fashion market.

According to Rellie, buyers in the luxury fashion market are currently purchasing brands with subdued profit streams due to the current down market. He described the current environment as being marked by opportunistic M&A at lower price points, which he humorously referred to as “bargain shopping.”

In light of the buyer-friendly M&A landscape, some sources drew parallels with the 2008 financial crisis, suggesting that deals made during that period resulted in some of the highest returns of the past decade.

Rellie highlighted the fact that billion-dollar M&A deals in the luxury sector have been notably lacking in recent years. Prior to the pandemic, there were typically two to three such deals each year originating from either Europe or the United States.

However, recent tariff increases have brought attention to underperforming brands that may be weighing down portfolios, potentially prompting strategic buyers to consider divestitures, according to Rellie.

Several luxury brands have emerged as potential acquisition targets in the current market. These include Ami Paris, which was acquired by Sequoia Capital China in 2021 and is now reportedly seeking a buyer. Brunello Cucinelli, an Italy-based brand that saw its stock list on the Euronext Milan exchange, remains an attractive target despite the founder’s preference for independence. Burberry, whose performance challenges sparked acquisition rumors last year, trades on the London Stock Exchange and was rumored to be a target of Moncler. Dolce & Gabbana, with aging co-founders and no clear successors, expressed a preference for a minority investor over an IPO.

Other potential targets mentioned include Giorgio Armani, who indicated plans to retire in the next few years, Guess? Inc., which received a nonbinding acquisition offer in March but did not finalize a deal, and Jimmy Choo, which may be next on the acquisition chopping block following its acquisition by Capri Holdings in 2017.

Diesel founder Renzo Rosso’s OTB Group postponed IPO plans until 2026 and owns fashion brands like Maison Margiela and Marni. The Row, founded by the Olsen sisters, received investments from Chanel and L’Oréal offices, valuing the company at $1 billion. Valentino, founded in 1960, had a luxury strategic partnership with Kering and Qatari investment fund Mayhoola that resulted in Kering acquiring a 30% stake in the company in 2023.

In conclusion, the current M&A environment in the luxury fashion market offers buyers unique opportunities to acquire brands with promising potential at reasonable prices, despite the overall challenging economic landscape. Sellers will need to be realistic in their pricing expectations, but with strategic planning, the current market presents a favorable climate for savvy acquisitions.