Investment bankers like Philip Bleser call it a “liquidity event” when the owner of a company cashes out and sells their business.
But the sudden ability to keep seven, eight or nine figures in their checking account might elicit something more like “ka-ching!” from everyone else.
It’s a moment with which Bleser, managing director and chief executive officer of J.P. Morgan’s midcorporate banking group, has some experience. There have been 38 apparel and retail M&A deals topping $1 billion over the last five years, and J.P. Morgan’s played an advisory role in more than half of them. Still, it’s not all about the money. “We’re in the relationship business,” Bleser said.
“There’s crying sometime; it’s a big step” when a company is sold, said Erik Oken, managing director and co-head of retail investment banking.
So that’s when Oken goes in for the hug, right? Not exactly. He’s more the type to hunt and fish with clients.
But Meredith Vanden Handel, managing director, is ready.
“Some of us have hugged,” she said during a group interview in Bleser’s office. “With many clients, this is a family event.”
These three, together with executive director Nik Johnston, are a family of sorts, too, and one that seems to genuinely like working together, completing each other’s thoughts.
Directing a group that spreads across 22 offices in the U.S. and Canada, the mild-mannered Bleser specializes in commercial and investment banking services for companies with revenues of at least $250 million, or quickly growing firms on their way to that realm. J.P. Morgan has helped nurture brands such as Michael Kors and Tommy Hilfiger as they expanded into the limelight.
Bleser spent 70 percent of his time on the road last year, meeting with clients, and he, like the bank overall, is starting to feel better about the economy, while keeping a close eye on job growth.
“There’s uncertainty in the small-business recovery,” he said. “The larger businesses are beginning to hire already.”
Many are looking for the quickly growing economies in Asia to provide M&A fireworks, but Bleser said there would be deals made around the world.
“Everybody thinks Asia, but it’s not necessarily going to be the case,” he said. “You’ll see Asia and Europe and Latin America and the U.S. all be active. There will be more cross-border opportunity, especially where currencies create opportunity. But what management teams are really after are those brands, those teams and a new distribution channel” that offer growth.
Fashion businesses went into cash-conservation mode during the recession and now they face a new, tougher consumer and are looking for expansion opportunities.
Oken said executives at companies that in the Nineties could afford to be exclusively in North America are now taking a look at the landscape and asking, “Do I need a new concept? Do I need to expand geographically?”
For many, the answer appears to be yes, especially given the decline in U.S. real estate development and the slow economic growth.
Investment bankers work hard to understand the industry and then pitch their ideas to executives.
“If you’re looking to create personal relationships, that has to be done in person,” Oken said. “I’d love to say I could do that over the phone, but I’m not that charming. What I like is whispering in the ceo’s and cfo’s ears.”
That whispering might include a bit more about private equity firms. Although Oken said private equity at its peak only accounted for about a third of the deal flow, the big-money investors are looking to get into deals in new ways.
“Private equity firms are trying to figure out a way to successfully integrate themselves into strategic transactions,” Oken said. “The walls between the strategic world and the financial world have broken down.”
Dealmakers are a leading indicator of sorts, since it can take 18 months or more to go through the entire acquisition process.
“It’s only been a short period of time for companies to review where they are,” said Johnston, adding it hasn’t even been 18 months since the market bottomed out last year. That means fashion M&A could perk up even more down the line.
As Vanden Handel noted of retail, “Every season can be a reinvention. There’s always that optimism.”
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