NEW YORK — With $120 billion itching to be spent by investors, it’s no wonder “merger mania” is the latest catch phrase on Wall Street.
But buyer beware! Valuations are all over the map. And investors new to the retail and fashion sectors may be unaccustomed to the cyclical nature of these businesses. Still, there are some bargains in the market right now, and some great brands.
During a WWD Financial Forum roundtable earlier this month, participants weighed in on current market conditions and other topics, including how investment bankers help clients grow their business by finding the right backer as well as the strategic mind-set of financial players when they’re evaluating a deal.
The roundtable was hosted by Berns Communications Group, a business communications firm specializing in retail and fashion, and moderated by WWD.
Representing the investment banking community were: Kenneth A. Wasik, managing director at Houlihan Lokey Howard & Zukin; William S. Susman, president and chief operating officer, Financo Inc., and Mark S. Vidergauz, managing director, The Sage Group. From the private-equity sector, the participants were: Norman Alpert, managing director, Vestar Capital Partners; David A. Landau, partner, Apax Partners, and Bodil M. Arlander, partner, Bear Stearns Merchant Banking.
WWD: What sectors within fashion and retail do you think have the most desirable candidates for investment?
Susman: A couple of areas within fashion are getting a lot of attention. I would include that whole surf space. Quiksilver has been a leader in that market and there are a lot of other names out there. Another is the growth brands, the small $15 million to $100 million firms that could become $500 million revenue companies with the right kind of financial partner to help them institutionalize the business and grow.
Wasik: The luxury goods side is where the cycle is very exciting now. There are also a lot of discussions with the mall-based ‘tween’ retailers where I think you’ll see a natural cleansing of the market.
Vidergauz: In addition to those sectors, there will be some activity in the accessories space and I think there will probably be some activity in the denim space.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"