Professional Documents
Culture Documents
Luxury market
Private Equity and
investors survey 2016
Contents
Executive Summary
15
22
34
Executive summary
Methodological approach
Main contents
Altagamma Foundation
Merger Market
Thomson M&A
One Source
Sources
Mint Global
Company press releases
Geographical footprint
Global
scope
Sectors covered
Apparel & Accessories | Watches & Jewelry | Cosmetics & Fragrances | Cars | Hotels | Furniture | Private Jets | Yachts | Cruises
Market segments
The survey focuses on the Premium segments in the sector, defined on the basis of quantitative (e.g. price point) and qualitative (e.g.
interviews with industry experts) parameters.
1,188
3.6%
5.6%
6.2%
Cars
Cruises
Yachts
Private Jets
Furniture
19.6%
45.2%
YoY
14-15
11.5%
Hotels
2,3%
16.4%
10.6%
Private Jets
9.5%
Total luxury
market
9.1%
Cruises
7.2%
Apparel &
Accessories
Cosmetics &
Fragrances
6.7%
6.0%
YoY @k
14-15
+17.3%
+7.0%
+15.4%
+8.0%
+16.7%
-1.0%
+14.8%
+5.0%
+14.3%
+4.0%
+14.7%
+2.6%
+13.6%
+1.0%
Furniture
4.6%
+10.3%
+4.0%
Watches &
Jewelry
4.5%
+8.0%
-3.0%
+2.0%
-1.0%
Yachts
1.3%
2015
Digital Revolution
Craftsmanship
Contemporary fashion
Fashion capitals
Highlights
The global growth of mature and emergent fashion capitals, driven by the
economic growth of emerging markets, offering the possibility of geographical
expansion to key players in the industry.
Cars
+3.5%
Outlook 2016
+8.0%
Outlook 2016
+4.0%
Outlook 2016
Cruises
Hotels
+2.5%
+5.0%
Outlook 2016
Outlook 2016
Furniture
Private Jets
+5.0%
Outlook 2016
+6.0%
Outlook 2016
Yachts
+3.0%
Outlook 2016
10
+2.5%
Outlook 2016
20
100%
20.0%
6
20.0%
30.0%
80%
10
10.0%
8
12.5%
20.0%
73 player
14.3%
16.7%
Break %
50.0%
20.0%
20.0%
60%
40%
90.0%
80.0%
87.5%
60.0%
50.0%
20%
60.0%
85.7%
Asia-Pacific
7%
North America
26%
Europe
67%
66.7%
50,0%
20.0%
16.7%
0%
0%
20%
60%
Apparel &
Accessories
Break (%)
40%
27.4%
8.2%
6.8%
80%
100%
Cars
Hotels
Yachts Cruises
Furniture
Private
Jets
11.0%
6.8%
2.7%
Note: Consolidated data on the main corporate groups operating in the reference market are reported, segmented by business area. The
collected data refer only to brands with a premium market positioning.
Source: Data from Altagamma Worldwide Luxury Market Monitor and company financial reports.
In order to analyze the business performance of the main players in the Fashion & Luxury industry,
summary economic and financial data was collected from a panel of 73 companies.
Key
Findings
The panel has been selected considering the size of total revenues of each player and its
representativeness in the analyzed sectors (covered market share). The organizations are mostly based in
Europe and North America, but they generally have a global business scope.
33.5
6.1
4.2
3.4
1.8
326.7
50.9
38.1
87.8
552.5
375.8
(68%)
Other
Luxury
markets
176.7
(32%)
Personal
Luxury
Goods
Apparel &
Accessories
Watches
& Jewelry
Cosmetics &
Fragrances
Cars
Hotels
Private Jets
Yachts
Furniture
Cruises
Total
15.9%
9.2%
6.9%
59.1%
6.1%
0.6%
1.1%
0.8%
0.3%
100.0%
Top players
51.5%
Mkt Share (%)
74.5%
65.3%
70.2%
16.9%
25.6%
44.4%
8.9%
96.8%
53.4%
Break (%)
Source: Data from Altagamma Worldwide Luxury Market Monitor and company financial reports.
In 2014, the total revenues recorded by the industry top players equaled around US$ 553 billion, of
which 60% was represented by Luxury Cars and 32% by Personal Luxury Goods.
Key
Findings
An analysis of the market shares held by the selected top players has highlighted the high level of
concentration characterizing Fashion & Luxury sectors, where some organizations hold over 50% of the
global market share. The Furniture sector appears to be highly fragmented.
11
32.7
Other Luxury
markets
6.7
6.3
5.1
4.4
3.1
Cars
Hotels
Cosmetics &
Fragrances
Watches
& Jewelry
Apparel &
Accessories
Private Jets
0.6
0.4
0.4
Yachts
Furniture
Cruises
Fashion & Luxury top players reported a turnover of US$ 7.6 billion; the average figure was significantly
influenced by the size of holdings in the Cars sector, where the average turnover was US$ 32.7 billion; if
this sector is excluded, then the average drops to US$ 3,6 billion.
Key
Findings
The companies operating in the Yachts, Furniture and Cruises sectors were generally small-sized
(average sales around US$ 500 million). On average, companies in the Personal Luxury Goods sector
had a turnover of around US$ 5 billion.
Avg. PLG
22.5%
16.9%
15.3%
13.9%
Avg. F&L
17.3%
12.4%
8.9%
Personal Luxury
Goods (PLG)
8.8%
2.5%
Apparel &
Accessories
Watches
& Jewelry
Cosmetics &
Fragrances
Cars
Hotels
+5 pp
Cruises
Private Jets
Furniture
Other Luxury
markets
Yachts
Key
Findings
12
Profitability in Personal Luxury Goods companies was around 5 percentage points higher than the
general Fashion & Luxury average. The best performing sectors were Apparel & Accessories (24.8%)
and Watches & Jewelry (22.5%). Yacht shipyards reported margins that were clearly lower than those
reached in the other sectors, with a 2.5% average operating profit.
Private Jets
High growth
markets
Personal
Luxury Goods
Stars
markets
Other Luxury
markets
15
Market size
Furniture
Watches &
Jewelry
9
Cars
Apparel &
Accessories
Cruises
6
Yachts
Hotels
Cosmetics &
Fragrances
Lower performer
sectors
0
0
10
15
20
Mature
markets
25
30%
13
14
Global
13%
100%
Apparel & Accessories
Yachts
Furniture
6%
11%
5%
9 deals
15 deals
33 deals
7 deals
51 deals
23%
5%
36%
19 deals
141 deals
Private jets
Hotels
7 deals
Overview by geography
North America
Europe
100%
29%
35 deals
(25%)
Other
11%
17%
App&Acc
Cos&Fra
43%
Hotels
81 deals
(57%)
Other
30%
Hotels
33%
App&Acc
6 deals
(5%)
33%
Hotels
33%
App&Acc
2015
Asia-Pacific
100%
15%
Cos&Fra
38%
Wat&Jew
46%
Hotels
Yachts
2 deals
(1%)
Hotels
Wat&Jew
100%
50%
75%
Cos&Fra
Cos&Fra
16%
17%
Middle East
100%
4 deals
(3%)
100%
25%
12%
2015
2015
25%
Japan
100%
50%
Furniture
13 deals
(9%)
Private
Jets
2015
2015
2015
Date
November
July
April
June
June
December
September
December
March
January
Target
Starwood
hotels
P&G
Coroin Ltd
Center
Parcs
Douglas
Holding
FRHI Hotels
Landmark
aviation
Pepe Jeans
Hypermarcas
The Net-A-Porter
Group Ltd
Bidder
Marriot
Intern.
Coty
Constellation
Hotels
Brookfield
partners
CVC
Accor
BBA
aviation
M1 Group
Coty
YOOX SpA
~12
~12
~4.7
~3.7
~3
~3
~2
~1
~1
~0.8
Value (B$)
Note: In the Relevant deals in 2015 list are included both announced and closed deals.
Private Equity and investors survey 2016
15
9
51
141
74
(52%)
Other
Luxury
markets
67
(48%)
Personal
Luxury
Goods
19
15
33
Break (%)
Apparel &
Accessories
Watches &
Jewelry
Cosmetics &
Fragrances
23.4%
10.6%
13.5%
Hotels 1
36.2%
Yachts
Private Jets
Furniture
Total Fashion
& Luxury
6.4%
5.0%
5.0%
100.0%
Note: The analysis includes the main M&A deals finalized in the Fashion & Luxury industry during 2015, excluding IPOs; the analysis takes into
consideration also transactions aimed at acquiring players in the Fashion & Luxury value chain as strategic suppliers and selective retailers;
(1) The analysis does not include deals having the purchase of tangible assets (real estate) as sole purpose
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
During 2015, around 141 M&A transactions focused on the larger Fashion & Luxury sector were carried
out globally; 48% of these deals (67 deals) involved Personal Luxury Goods companies.
Key
Findings
Because of the uncertainty characterizing global markets, investors turned to companies with substantial
property assets, i.e. Hotels (representing 36% of total transactions), in order to protect themselves
against economic and currency fluctuations. Deals were distributed as follows among the remaining
sectors: Yachts 6.4% (9 deals), Private Jets 5.0% (7 deals) and Furniture 5.0% (7 deals).
47%
< 100M$
100-500M$
500M$ - 1B$
> 1B$
Total Fashion
& Luxury
Note: The average deal value has been calculated excluding the transactions for which no specific condition details are available
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases,
Key
Findings
16
In 2015, around 47% of M&A transactions had an overall value below US$ 100M. 50% of these deals
focused on target companies operating in Personal Luxury Goods sectors. The deals with a unit value above
US$ 500 million accounted for 18% of all transactions. In 2015, top deals i.e. deals with value exceeding
US$ 1 billion represented 11% of transactions and were concentrated in the Hotels sector (65% of deals).
The high deal value in this sector results from the very features of the transaction, which focuses on the
acquisition of the business AND the purchase of the property assets owned by the target company
2,065
Other Luxury
markets
573
498
Avg . F&L
426M$
297
182
Avg. PLG
278M$
100
18
Private Jets 1
Hotels
Cosmetics &
Fragrances
Apparel &
Accessories
Watches
& Jewelry
Furniture
Yachts
Note: The average deal value has been calculated excluding the transactions for which no specific condition details are available; the
analysis excludes some deals which represented outliers, as they would not allow a reliable analysis of sector averages.
(1) The value reported for the Private Jets sector refers to a single transaction, for which economic and financial details are available.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
In 2015, the most sizable acquisition deals were finalized in the Private Jets and Hotels sectors, with an
average value per deal greater than US$ 500 million.
Key
Findings
The average deal value in the Apparel & Accessories sector equaled US$ 297 million - i.e. 0.7 times the
average value of the whole Fashion & Luxury industry; this was mainly a consequence of the strong
focus of investors on small-sized (low-turnover), fast-growing target companies. The same applies to the
Watches & Jewelry sector.
35
3
3
4
4
6
15
North
America
Deal per
settore
7
5
10
Hotels
27
1.4%
Private Jets
Hotels
Rest of
the World
Furniture
Deal per
settore
Yachts
Private Jets
Furniture
Middle
East
Cosmetics & Fragrances
Asia-Pacific
4.3%
Hotels
Hotels
Deal per
settore
Yachts
1
Deal per
settore
Europe
9.2%
13
24
Deal per
settore
2.8%
57.4%
81
3
5
Deal per
settore
Hotels
Japan
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
17
6.0%
4.8%
15.7%
16.9%
32.5%
<25M$
25-50M$
51-100M$
101-250M$
251-500M$
501-1,000M$
>1,000M$
Total Fashion
& Luxury
Note: The analysis is based on a sample of target companies for which official turnover figures as at the end of FY 2014 were available.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
In 2015, investments in the Fashion & Luxury industry were focused mainly on smaller-sized organizations:
around 67% of the target companies had a turnover below US$ 100 million
Key
Findings
Only 10% of the total number of deals involved organizations with sales exceeding US$ 500 million.
The main giant deals were as follows:
Acquisition of Starwood Hotels by Marriot International (deal value ~12-13B$).
Agreement between Procter&Gamble and Coty concerning the transfer of 43 haircare brands to the
multinational Perfumes company (deal value ~12.5B$).
Acquisition of the Douglas perfumery chain by the CVC Capital Partners private equity fund (deal value
~3B US$).
In 2015, the average turnover reported by the acquired companies equaled US$ 425M; most deals involving
big companies were executed in the Apparel & Accessories and Hotels sectors.
Average turnover of the acquired companies by sector (M$)
Personal Luxury
Goods (PLG)
663
Other Luxury
markets
572
276
Avg. PLG
453M$
Avg. F&L
425M$
227
214
67
Apparel &
Accessories
Hotels
Private Jets
Watches
& Jewelry
Cosmetics &
Fragrances
Furniture
34
Yachts
Note: The analysis is based on a sample of target companies for which official turnover figures as at the end of FY 2014 were available.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
The average turnover reported by the companies acquired in 2015 equaled around US$ 425M, or US$
453M if only Personal Luxury Goods companies are considered.
Key
Findings
18
Large-sized target companies were concentrated in the Apparel & Accessories (avg. US$ 663M) and Hotels
(avg. US$ 572M) sectors.
Bidder Profile
In 2015, 50% of deals were executed by Financial Investors, of which around 90% were Private Equity
investors; the remaining half of deals were carried out by Corporate investors operating in the Fashion & Luxury
industry...
Investor profile in PE exits (%)
100.0%
Strategic
investor
100.0%
4.3%
10.0%
100.0%
Other investors
Real Estate
50.0%
Financial
investor
50.0%
Bidder type
Strategic
investor
50.0%
Venture Capital/
Private Equity
85.7%
Financial
investor
Bidder sector
50.0%
Bidder type
100.0%
8.6%
Other industries
25.7%
Other F&L
sectors
10.0%
Yachts
20.0%
Hotels
10.0%
Fragrances &
Cosmetics
25.7%
Apparel &
Accessories
Bidder sector
Note: A deal with undisclosed Bidder name has been excluded from this analysis.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
Key
Findings
In 2015, the main bidders in 50% of the executed deals were Financial Investors, represented by Private
Equity funds in ~90% of cases. 50% of transactions were carried out by Strategic Investors, of which
25.7% were large corporate investors operating in the Apparel & Accessories sector, 10.0% were investors
operating in the Fragrance & Cosmetics business, and 20.0% specialized in the Hotels sector. 8.6% of
deals were executed by investors operating in sectors external to the Fashion & Luxury industry.
...in particular, an analysis of investment strategies shows that PE investors were mostly interested in Personal
Luxury Goods companies, whereas large corporations tended to invest in their own sector.
Type of exit broken down by target company sector (propensity idx)
Strategic investor
Propensity (Idx 100)
Financial investor
propensity (Idx 100)
Note: The propensity index has been calculated by comparing the exit strategy mix in each sector with the general average observed in the
analyzed sample, weighted according to deal concentration in that sector in 2015.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
Key
Findings
The analysis of acquisition strategies confirms that Private Equity funds despite an increased focus
on experiential luxury sectors (e.g. Hotels) still show a propensity to invest in Personal Luxury Goods
companies. The most significant deals included: The acquisition of Pepe Jeans, - the Spanish premium
jeans brand - by M1 Group and L Capital Asia; The acquisition of Twin-Set an Italian player in the
premium App&Acc sector - by The Carlyle Group.
The remaining Fashion & Luxury sectors mainly attracted Strategic Investors adopting consolidation and/or
business growth strategies.
Private Equity and investors survey 2016
19
Seller
Buyer
34%
Sponsor to Sponsor
Financial Seller
45 deals
66%
Strategic Seller
92 deals
Spo
Stra nsor
teg to
ic
tegic
Stra nsor
o
p
S
50%
17 deals (36%)
53 deals (57%)
Financial Investor
71 deals
to
50%
30 deals (64%)
Strategic Investor
66 deals
Strategic to Strategic
40 deals (43%)
Note: A deal with undisclosed Bidder name has been excluded from this analysis.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
Key
Findings
In 2015, 66% of exit transactions were executed by Strategic Sellers; in 57% of these deals, the
counterparty was a Financial Investor (Strategic to Sponsor), whereas in 43% of deals the counterparty
was a Strategic Investor (Strategic to Strategic). Financial Sellers executed most deals with strategic
investors; 30 Sponsor-to-Strategic transactions were finalized (representing 64% of Financial Sellers).
% Financial
investor
3.6% 1.5%
3.6%
6.6%
20.4%
64.2%
Growth capital
49%
Buyout
64%
Consolidation
11%
Turnaround
80%
Recapitalisation
Merger
100%
37%
63%
80%
100%
100%
100%
11%
19%
89%
81%
100%
100%
100%
100%
23%
56%
100%
100%
100%
77%
44%
Minority
Majority
0%
Apparel
& Accessories
Watches
& Jewelry
Cosmetics
& Fragrances
Hotels
Furniture
Private
Jets
Yachts
Total Fashion
& Luxury
Note: This analysis is based on a sample of 91 target companies for which information about the equity stake in the target company acquired through the transaction was available.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
Key
Findings
In 2015, 64.2% of deals were based on a growth capital strategy, followed by 20.4% based on a buyout logic, of which 64% were
executed by Private Equity funds. Business consolidation strategies accounted only for 6.6% of all deals mainly executed by Strategic
Investors (around 90%). 80% of turnaround and recapitalization deals were executed by Private Equity funds.
Overall, 77% of the finalized deals were aimed at the acquisition of a majority stake in the target company; deals aimed exclusively at the
acquisition of a majority stake were executed in some sectors, such as Furniture, Private Jets and Yachts.
It should be noted that 56% of the deals finalized in the Watches & Jewelry sector resulted in the acquisition of a minority stake.
20
36.0%
36.0%
20.0%
8.0%
<5x
5-10x
11-15x
>15x
Total Fashion
& Luxury
50% in
Hotels sector
Note: This analysis is based on a sample of 31 companies for which information about the EV/EBITDA multiple assigned to the target
company was available.
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
Key
Findings
An analysis of the Enterprise value/EBITDA multiple achieved on a sample of deals for which transaction
details had been disclosed, confirms the premium value assigned by investors to Fashion & Luxury players:
36% of all deals were closed with a multiple greater than 15x.
The companies operating in the Hotels sector proved to be the best performing ones in 2015. 50% of
target companies were valued above 15x, mainly thanks to the mark-up associated with property assets
A 5-10x EBITDA multiple was achieved on 36% of deals.
21
100.0%
Other
investors 1
10.2%
Private
Equity
100.0%
20.0%
> 1B
24.0%
500M 1B
89.8%
44.0%
12.0%
Rest of the
world
24.2%
North
America
53.0%
Europe
100M 500M
< 100M
Investor type
22.7%
Geographical presence
(1) The other investors category includes: Family offices, Luxury Holding firms, Pension funds, Sovereign Wealth funds.
Source: Deloitte survey.
90% of the investors participating in the survey are Private Equity funds, of which 44% manage assets for
a total value between US$ 100 and 500 million and 24% have assets between US$ 500M and 1B. 20%
of the funds in the survey have total assets exceeding US$ 1 billion. The geographical scope of the funds
considered in the survey encompasses mainly Europe and North America.
Key
Findings
65% of survey respondents are investors based in Europe; in 41% of cases they are Managing Directors and/or
Partners.
Investor location (%)
Asia
9.3%
Asia
7.4%
7.4%
Investment Investment
manager manager
16.7%
16.7%
9.3%
North
North
America 25.9%
America 25.9%
40.7%
64.8%
Managing director
/ director /
Managing
Partner
Partner
40.7%
64.8%
Europe
Europe
35.2%
35.2%
Director / Principal
Director / Principal
Key
Findings
Survey respondents are based mainly in Europe (64.8%) and North America (25.9%). In order to ensure
the global representativeness of the sample, also some investors based in the Asian market mainly in
China, Hong Kong and Singapore - (9.3% of total respondents) have been interviewed.
The main top management roles in Private Equity funds have been involved in the survey, e.g. Managing
Directors & Partners (40.7%), Directors & Principals (35.2%) and Investment managers (16.7%).
23
40.7%
22.9%
High
(> 25% of AuM)
40.0%
Medium
(5-25% of AuM)
37.1%
Low
(< 5% of AuM)
59.3%
Portfolio focus
on the F&L industry
Key
Findings
Around 60% of respondents say they manage at least one Fashion & Luxury asset in their investment
portfolio. Around 23% of investors say they are highly focused on Fashion & Luxury. In general, the level of
concentration in this industry is medium to low, as a matter of fact 80% of the sample maintain that the
assets they own cover max. 25% of the current portfolio.
The sectors in which respondents say they have most of their F&L assets are: Apparel & Accessories (71.4%),
Furniture (48.6%), Watches & Jewelry (30%) and Cosmetics & Fragrances (27%).
Breakdown by investment sector of assets managed by investors (%)
71.4%
48.6%
Furniture
34.3%
30.0%
28.6%
27.0%
Cosmetics &
Fragrances
Selective Retailing
Other F&L
sectors1
% of respondents = 59.3
(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises.
Source: Deloitte survey.
Key
Findings
24
71% of respondents who maintain they have at least one Fashion & Luxury asset in their portfolio
concentrate their investments in the Apparel & Accessories sector. Among the remaining sectors, the ones
in which respondents invest the most are as follows: Furniture (48.6%), Watches & Jewelry (30%) and
Cosmetics & Fragrances (28.6%). The analysis shows that investors are focused mainly on Personal Luxury
Goods companies.
Investors maintain that in ~72% of cases the Fashion & Luxury assets in their portfolio have sales below US$
100M, whereas 20% of them own medium-sized assets (companies with sales between US$ 100 and 250M).
Average turnover of Fashion & Luxury assets in investors portfolios (%)
71.4%
5.71%
2.86%
100.00%
>500 M$
Total
F&L Investors
20.00%
22.86%
28.57%
20.00%
<25M$
25-50M$
51-100M$
101-250M$
251-500M$
% of respondents = 59.3
Source: Deloitte survey.
71.4% of the assets in the current portfolio of investors have a turnover below US$ 100 million
Key
Findings
Only 20% of the considered sample invests in medium-sized companies, whereas only 8% has stakes in
large-sized organizations.
25
100.0%
40.7%
59.3%
71.4%
28.6%
68.6%
31.4%
Majority
< 5 years
71.4% of respondents maintain they have a majority stake in the Fashion & Luxury companies present in
their investment portfolio; this figure is in line with data referring to deals finalized in 2015 (77%).
Key
Findings
In most cases (68.6%), the average duration of Fashion & Luxury assets present in the current portfolio of
investors is below 5 years.
The development of distribution channels, internationalization, and performance improvement are the main
strategies adopted by investors to promote the growth of their Fashion & Luxury assets.
Adoption of main key strategic drivers (%)
Main drivers
Creation of a new
distribution channel
60.0%
Internationalization
strategy
51.4%
Performance
improvement
37.1%
New Product
Development
28.6%
Change in
management
22.9%
Brand line
Extension
22.9%
Brand
re-positioning
Value chain
vertical expansion
Financial restructuring
and/or leverage
20.0%
14.3%
11.4%
% of respondents = 59.3
Source: Deloitte survey.
Key
Findings
26
In 2015, the main strategies used to create economic value from the assets owned were:
Development of new distribution channels - 60%
Penetration of new geographical markets - 51%
Improvement of operational performance through actions to increase efficiency - 37%
Development of new products - 29%
No exit in 2016
At least one
exit in 2016
55.9%
44.1%
Divestments
in 2016
100.0%
21.1%
Other
strategies 1
26.3%
Closing
investment
period
52.6%
High returns
opportunity
Exit driver
55.9%
44.1%
Divestments
in 2016
100.0%
8.3%
37.5%
54.2%
Exit strategy
100.0%
IPO
Secondary
buyout
Trade sale
55.9%
73.3%
> 10x
26.7%
< 10x
44.1%
Divestments
in 2016
Expected
EBITDA multiple
% of respondents = 58
(1) The other strategies category includes: Change in investment strategy and Mismatch of Market Trends versus the investment thesis scenario.
Source: Deloitte survey.
Key
Findings
44% of investors maintain they intend to sell some of the Fashion & Luxury assets currently in their portfolio
during 2016. Moreover, the respondents say that the possibility of maximizing the return on their investment
(according to 52.6% of the sample) as a matter of fact, 73% of investors expect to achieve EBITDA
multiples above 10x and the completion of the investment cycle (26.3%) will be the main incentives to
exit in 2016. Trade sales (54.2%) and secondary buy-outs (37.5%) are likely to be the most popular exit
strategies.
27
100%
4%
10%
Strong
increase
(>10%)
Increase
(5-10%)
Stable
(0-5%)
Decrease
(<0%)
100%
100%
6%
14%
42%
49%
100%
40%
4%
21%
4%
46%
46%
69%
10%
100%
7%
23%
100%
5%
100%
8%
36%
45%
49%
43%
39%
27%
16%
100%
11%
39%
33%
37%
100%
29%
48%
45%
55%
38%
Positive
sentiment
100%
2%
9%
45%
38%
38%
32%
22%
25%
21%
Total F&L
market
53%
7%
7%
9%
Cars
Hotels
Furniture
Private
Jets
Yachts
Cruises
54%
50%
60%
39%
30%
41%
9%
% of respondents = 100
Source: Deloitte survey.
53% of all respondents forecast a growth in the Fashion & Luxury market during 2016; 15% of them (i.e.
8% of all respondents) predict the increase will exceed 10%.
Key
Findings
According to over 50% of respondents, the Cosmetics & Fragrances, Furniture, Apparel & Accessories, Cars
and Hotels sectors will grow by over 5%, whereas around 10% of them forecast a double-digit trend.
Some difficulties are expected in the Yachts and Private Jets sectors, in which according to 25% of
respondents a negative trend will develop over the next year.
Investors with assets in the F&L industry anticipate better results in the Apparel & Accessories, Cosmetic &
Fragrances and Cars sectors.
Expected market trends in 2016 - breakdown by sector (%)
100%
100%
13%
100%
14%
47%
Investors with
assets in the
Fashion &
Luxury industry
52%
100%
3%
41%
38%
40%
100%
11%
40%
39%
100%
5%
32%
32%
11%
100%
8%
11%
100%
5%
100%
10%
100%
100%
100%
100%
100%
100%
15%
11%
11%
11%
16%
20%
40%
35%
10%
+2%
+33%
26%
42%
47%
22%
33%
39%
33%
37%
28%
28%
5%
Cars
Hotels
Furniture
Private
Jets
Yachts
Cruises
+3%
-14%
-24%
-5%
-6%
+4%
Increase (5-10%)
44%
40%
21%
5%
26%
-4%
11%
100%
6%
63%
26%
58%
35%
100%
8%
42%
43%
14%
12%
37%
46%
23%
17%
35%
38%
100%
7%
27%
17%
35%
100%
5%
50%
39%
13%
45%
100%
4%
23%
36%
48%
6%
50%
Delta positive
sentiment
48%
100%
4%
69%
29%
Investors not
operating in the
Fashion &
Luxury industry
100%
8%
Stable (0-5%)
16%
8%
Total F&L
market
+1%
Decrease (<0%)
Note: The positive sentiment delta represents the difference expressed as a percentage between investors operating, and those not operating,
in the F&L industry who expect a market growth.
Fonte: Deloitte Survey.
28
Positive
sentiment
100%
100%
12%
7%
33%
100%
4%
100%
24%
30%
100%
20%
100%
3%
37%
14%
45%
44%
33%
36%
8%
47%
52%
51%
100%
47%
23%
24%
45%
11%
15%
16%
38%
47%
20%
3%
9%
Europe
North
America
Latin
America
Japan
Asia
Middle
East
Rest of
the World
Global
F&L market
35%
64%
44%
28%
75%
64%
50%
53%
% of respondents = 100
Source: Deloitte survey.
Key
Findings
The geographical areas that are expected to experience the strongest growth in 2016 are Asia, the MiddleEast and North America: over 60% of respondents expect that growth will exceed 5% in these areas.
The best performances are expected in the Asian market, where 30% of investors predict a double-digit
growth. The respondents do not seem to agree on Japan: 28% of them predict a positive trend for 2016
and 24% expect a contraction of the market.
The majority of respondents expect the trend to remain stable in Europe over the next year.
Investors with assets in the F&L industry anticipate better results in Europe and Latin America.
Expected market trends in 2016 - breakdown by geographical area (%)
100%
3%
Investors with
assets in the
Fashion &
Luxury industry
100%
14%
12%
45%
52%
13%
15%
34%
100%
10%
100%
100%
24%
25%
70%
52%
52%
14%
10%
11%
100%
16%
22%
100%
100%
6%
100%
39%
28%
39%
100%
7%
46%
36%
29%
52%
35%
100%
100%
8%
53%
44%
40%
40%
11%
12%
59%
28%
39%
33%
38%
33%
6%
6%
28%
22%
24%
Europe
North
America
Latin
America
Japan
Asia
Middle
East
+33%
+4%
+9%
-8%
+4%
-10%
100%
4%
43%
36%
52%
15%
Delta Positive
sentiment
100%
4%
22%
36%
39%
100%
Investors not
operating in the
Fashion &
Luxury industry
100%
Increase (5-10%)
Stable (0-5%)
7%
8%
Rest of
the World
Total F&L
market
-6%
+1%
Decrease (<0%)
Note: The positive sentiment delta represents the difference expressed as a percentage between investors operating, and those not operating,
in the F&L industry who expect a market growth.
Fonte: Deloitte Survey.
Private Equity and investors survey 2016
29
75.0%
At least one F&L asset in
the investment portfolio
47.7%
38.6%
34.1%
25.0%
20.5%
24.1%
75.9%
Apparel &
Accessories
Cosmetics &
Fragrances
Furniture
Selective
Retailing
Watches
& Jewelry
Other F&L
sectors1
Current investor
in F&L
69.7%
71.4%
64.7%
66.7%
44.4%
54.5%
New investor
in F&L
30.3%
28.6%
35.3%
33.3%
55.6%
45.5%
% of respondents = 98
(1) The other F&L sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises.
Source: Deloitte survey.
The respondents who plan to invest in the Fashion & Luxury industry (76% of all respondents) will focus on the
Apparel & Accessories sector (75% of respondents).
Key
Findings
Investors show strong interest also in the Cosmetics & Fragrances sector, where around 50% of the sample
plans to finalize at least one deal. The main sectors expected to attract investments over the next year
include Furniture, Selective Retailing and Watches & Jewelry; the latter draws a large number of investors
from different industries (other than F&L) who are attracted by the increase in sales and operating margins
characterizing this sector. General propensity to invest in Personal Luxury Goods companies.
Propensity to invest in the various F&L sectors tends to be similar among investors with or without assets in the
F&L industry.
Propensity to invest in Fashion & Luxury assets in 2016 and main target sectors (%)
76.7%
50.0%
Investors with
assets in the
Fashion &
Luxury industry
36.7%
33.3%
13.3%
Apparel &
Accessories
Cosmetics &
Fragrances
Furniture
42.9%
42.9%
Cosmetics &
Fragrances
Furniture
Selective
Retailing
20.0%
71.4%
Investors not
operating in the
Fashion &
Luxury industry
Apparel &
Accessories
(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises.
Source: Deloitte survey.
30
35.7%
Selective
Retailing
35.7%
35.7%
100%
100%
10%
11%
100%
6%
6%
100%
7%
13%
9%
47%
55%
53%
45%
14%
21%
Cosmetics &
Fragrances
20%
Watches
& Jewelry
251 - 500M
101 - 250M
9%
29%
14%
6%
500 - 1B
41%
33%
44%
100%
2%
8%
19%
29%
44%
Apparel &
Accessories
100%
12%
7%
Furniture
Selective
Retailing
27%
Other F&L
Sectors1
51 - 100M
20%
25 - 50M
< 25M
11%
Total F&L
market
% of respondents = 75
(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises.
Source: Deloitte survey.
Key
Findings
The survey shows an investor propensity to acquire large organizations in the Apparel & Accessories
sector, which will be the main target sector in 2016; more specifically, 27% of respondents plan to invest
in companies with sales over US$ 100M. 80% of respondents planning to carry out M&A deals in the
Cosmetics & Fragrances, Watches & Jewelry and Furniture sectors will select small to medium-sized target
companies with a turnover below US$ 100M.
61.4%
54.5%
20.5%
18.2%
Expansion
capital
LBO or
Replacement
Support to
MBO/MB
Corporate
carve-out
Other
strategies 1
Minority stake
37.0%
18.5%
16.7%
33.3%
8.3%
Majority stake
63.0%
81.5%
83.3%
66.7%
91.7%
% of respondents = 75
(1) The other strategies category includes: Turnarounds and Start-up Financing.
Source: Deloitte survey.
Over 50% of respondents plan to finalize new acquisitions in the Fashion & Luxury industry through
Expansion Capital, Leverage Buyout and Management Buyout strategies.
Key
Findings
Investors anticipate acquiring a majority stake in the target company through most of the transactions
carried out.
Private Equity and investors survey 2016
31
100.0%
80%
23.3%
43%
44.2%
27%
23%
18.6%
9%
14.0%
0 - 20%
21 - 40%
41 - 60%
> 60%
Total
Senior debt
Other types 1
% of respondents = 100
(1) The other types category includes: Junior Debt, Unitranche and Equity.
Source: Deloitte survey.
~67% of transactions will result in the acquisition of a stake of more than 40% in the target company.
Senior debt will be the main funding source for acquisition deals in the Fashion & Luxury industry.
Key
Findings
32
The other main funding sources mentioned by investors include Shareholders loans (43%), Vendors notes
or convertible bonds (27%) and Mezzanine Financing (23%).
100%
10%
68%
60%
100%
20%
100%
100%
13%
11%
56%
56%
31%
33%
100%
10%
100%
12%
40%
50%
57%
> 30%
50%
30%
23%
Apparel &
Accessories
30%
21-30%
31%
< 20%
Cosmetics &
Fragrances
Watches
& Jewelry
Furniture
Selective retailing
Other F&L
sectors 1
% of respondents = 75
(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises.
Source: Deloitte survey.
Key
Findings
On average, investors expect the new investments in the Fashion & Luxury industry to have an IRR
between 21% and 30%. The best performing sector in terms of average profitability - is expected to be
Watches & Jewelry, for which around 20% of respondents forecast an IRR greater than 30%, as confirmed
by an analysis of the business performance of top players.
The highest returns are expected from large-sized organizations; 35% of the investors who forecast an IRR
above 20% plan to invest in companies with sales above US$ 100M.
Internal Return Rate expected from new F&L investments breakdown by target company size (%)
29.5%
70.5%
6.5%
23.1%
9.7%
19.4%
Big Companies
account for
35.6% of high
return investments
38.5%
35.5%
500 - 1B$
251 - 500M$
101 - 250M$
23.1%
16.1%
51 - 100M$
25 - 50M$
15.4%
12.9%
< 20%
< 25M$
> 20%
Expected IRR (%)
% of respondents = 100
Source: Deloitte survey.
Private Equity and investors survey 2016
33
Countries involved
France - Germany - Italy - Netherlands - Spain Switzerland - Turkey - United Kingdom.
Main Objective
Cross-border cooperation to leverage on specific local
expertise to deliver high level services to Fashion &
Luxury clients and targets across Europe.
Risk Analytics
Internal Controls
Internal Audit Services
Sustainability
Corporate Finance Advisory
Strategy & Business Planning
Transaction Services
Forensic
Transfer prices supply chain
Custom duties/vat/logistic tax issues supply chain
Data privacy
Personal planning for private family
34
F&L
App&Acc
Cos&Fra
Wat&Jew
PLG
IRR
PE
M&A
Contacts
Deloitte Fashion & Luxury Leaders
China
Ivan Man Kit Wong | ivawong@deloitte.com.hk
Olderigo Fantacci | ofantacci@deloitte.com
France
Benedicte Sabadie | bsabadiefaure@deliotte.fr
Germany
Karsten Hollasch | Khollasch@deloitte.de
Italy
Patrizia Arienti | parienti@deloitte.it
Netherlands
Victor Hoong | vhoong@deloitte.nl
Spain
Juan Jos Peso | jpeso@deloitte.es
Victoria Lopez Tellez | vlopeztellez@deloitte.es
France
Claire Deguerry | cdeguerry@deloitte.fr
Germany
Karsten Hollasch | Khollasch@deloitte.de
Italy
Elio Milantoni | emilantoni@deloitte.it
Tommaso Nastasi | tnastasi@deloitte.it
Spain
Roberto Martinez Roldan | rmartinezroldan@deloitte.es
Turkey
Hakan Gol | hgol@deloitte.com
Switzerland
Howard Da Silva | hdasilva@deloitte.ch
Andreas Gehre | agehre@deloitte.ch
UK
Richard Lloyd-Owen | rlloydowen@deloitte.co.uk
Mark Pacitti | mpacitti@deloitte.co.uk
UK
Nick Pope | nipope@deloitte.co.uk
US
Lorin DeMordaunt | ldemordaunt@deloitte.com
Switzerland
Karine Szegedi | kszegedi@deloitte.ch
Singapore
Jiak See Ng | jsng@deloitte.com
Heath Snyder | hsnyder@deloitte.com
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