Avalon Group, Net Worth to Merge

Tie-up makes broader advisory firm with expertise in middle-market fashion.

The business of buying, selling and advising middle-market firms is booming — so much so that the dealmakers are now getting into the game.

This story first appeared in the July 13, 2012 issue of WWD.  Subscribe Today.

Investment bank Avalon Group and advisory firm Net Worth Solutions Inc. struck a deal to merge and become Avalon Net Worth.

Avalon, which has a background in the consumer and retail sectors, is a registered broker dealer and better placed to both raise money and serve public companies, while Net Worth has a tighter focus on the fashion sector. Lynda Davey, chief executive officer and founder of Avalon, and Jack Hendler, president and founder of Net Worth, will lead the combined business as co-ceo’s. The companies have worked in the past with clients such as Bill Blass Outerwear, Joan & David, London Fog, Jane Cosmetics and Frederick’s of Hollywood.

“We can guide, advise and help to finance companies where the ultimate goal is an initial public offering,” Hendler said. “Our bandwidth has been broadened.”

Davey said the market is hopping. “There still is a tremendous amount of money sitting on the sidelines in private equity funds and on corporate balance sheets,” she said. “It may be a very busy time at the end of the year.”

Even though the macroeconomic picture has darkened in recent weeks, the two said smaller firms have fared better this year than they have in some time and that looming changes in the tax code have owners exploring their options and considering estate planning issues.

Middle-market vendors have come under increasing pressure in recent years as retailers consolidated. Hendler said the number of players has narrowed and that not many wholesale brands can survive with just $10 million or $15 million in sales.

Still, there is new hope for smaller firms in an emerging business model. Hendler said he’s starting to see more clients that have a limited revenue base, but are more profitable because they use the Internet to go directly to the consumer and therefore cut out the costs of a traveling sales force and additional samples.