The Role of PE and Strategics in Retail M&A

Wal-Mart’s recent acquisition of e-tailer, following the Hudson’s Bay Co.-Gilt Groupe and Bed Bath and Beyond-One Kings Lane deals earlier this year, illustrate a trend in the retail M&A market: Strategic acquisitions are coming to the forefront.

Our own Natalie Kotlyar told The Deal that, “Organic growth has been difficult to come by. Many retailers understand the way to grow is through a strategic acquisition, whether that’s a partnership with another retailer, or the purchase of a line of products that they don’t currently offer, or buying a company that’s in its infancy.”
Whereas private equity firms were once the biggest players in the consumer products and retail sectors, deal activity in the space is largely being driven by traditional retailers looking to build out their omnichannel capabilities by combining their operations with online competitors.

That’s not to say there’s no role for PE firms to play in the market. “I do think there’s a place for both strategics and PE in the M&A market,” Natalie explains to The Deal. “It’s just that it’s a crowded space, and that’s what’s increasing the multiples.”  

As always, PE firms are seeking brands in need of capital or a fresh infusion of strategy to meet evolving consumer needs. And as Brexit jitters, the election, talks of interest rate hikes and other factors drive tepid spending among consumers and retailers alike, private equity firms have also been targeting some brands who are keen to restructure out of the investor’s spotlight.

To read the full article in The Deal, click here.