Private Equity & Retail: The Importance of Cross-Industry Insights, Perspective and Experience

Historically, the private equity industry has invested heavily in the retail sector. While that investment has fluctuated since the market downturn in 2007, we are now seeing a return of private equity appetite for retail. In fact, in Q1 2014, private equity-backed buyout investments in the retail and consumer sector accounted for the largest proportion of capital investment of all buyout deals (22 percent), according to data from Preqin.

At BDO, we know that industry-specific knowledge is critical to providing effective counsel to all of our clients—and this is especially true when it comes to working with fund sponsors and their portfolio companies. That’s why we often work across industry groups to better serve our clients. For example, our Retail & Consumer Products practice regularly collaborates with our Private Equity practice to ensure we obtain the best possible outcomes for our clients when sourcing and closing deals, growing their portfolio companies and exiting their investments.

This cross-industry focus is not limited to the Private Equity and Retail practices – in fact, the Private Equity practice works closely with all of BDO’s 15 industry-specific practice groups to provide extensive experience and insight on industry-specific issues.

We developed BDO’s Private Equity Practice Knows Industries eBook to delve into such client scenarios in which the Private Equity practice worked with another industry practice group.

In this eBook, we dive into an engagement where the Retail & Consumer Products practice worked with the Private Equity practice to support a private equity fund client throughout their purchase of a large apparel retailer that had filed for Chapter 11. BDO was brought in to serve as an advisor through the turnaround.

And the results?

Ultimately, the large retailer successfully emerged from bankruptcy, significantly reduced its operating losses and maintained a positive EBITDA multiple, year-over-year.

By working together, BDO’s Retail & Consumer Products and Private Equity practices were able to:
  • Provide value, immediately: BDO conducted extensive research and led the fresh start accounting process, which determined the company’s reorganization value and established a new basis for financial reporting.
  • Serve as trusted advisors: A year after the Chapter 11 filing, BDO introduced a new CEO and CFO to the fund manager and served as an advisor to support the executive transition.
  • Be retained as the service provider of choice: As a result of our success on this transaction, BDO maintained the private equity fund as a client and continues to provide ongoing audit, tax planning and structuring services.
We invite you to read more about this particular engagement, as well as additional private equity work that BDO has performed in other industries, including: healthcare, life sciences, manufacturing, natural resources and real estate industries, in BDO’s Private Equity Practice Knows Industries eBook.