The luxury slowdown in 2024 has affected M&A, as brands avoid selling amidst poor market conditions. Historical trends suggest a resurgence in M&A activity may follow if the market stabilizes. Notable transactions occurred despite challenges, and experts anticipate 2025 to be active for acquisitions, particularly of heritage brands as companies reassess their portfolios.
The luxury market has experienced a slowdown in 2024, creating a complex environment for mergers and acquisitions (M&A). During downtimes, brands typically hesitate to seek mergers as they wish to avoid selling at reduced valuations, and potential acquirers exercise greater caution. Nevertheless, downturns offer a unique chance for brands to reassess their assets. Historically, heightened M&A activity followed after economic recoveries, suggesting a resurgence could occur if the luxury market stabilizes in 2025. “Historically I don’t think that a lot of deals happen during a downturn because companies don’t want to sell when the prices are not good,” states Jelena Sokolova, senior equity analyst at Morningstar.
Despite sluggish conditions, several notable deals emerged throughout 2024. Kering’s acquisition of a 30 percent stake in Valentino and EssilorLuxottica’s purchase of Supreme from VF Corporation exemplify strategic maneuvers, albeit against the backdrop of a challenging economic landscape. The luxury e-commerce sector witnessed consolidation due to disruption and financial pressures, prompting companies like Mytheresa to capitalize on competition weaknesses.
Anticipations for 2025 lean towards heightened M&A activity as brands seek funding or divestiture to sustain and grow their businesses. Experts underscore heritage brands as prime targets, with limited independent labels remaining available for acquisition. “There are very few legacy brands that are up for deals,” notes Joëlle Grunberg, partner at McKinsey. As the market throughout 2025 evolves, attention will be critical on companies’ financial positions and potential shifts in consumer sentiment.
The article explores the impact of the luxury market’s slowdown on mergers and acquisitions in 2024. It outlines the complexities businesses face during economic downturns, such as reluctance to engage in transactions due to unsatisfactory valuations. Historical trends reveal that M&A activity often heightens following economic recovery phases. The piece also highlights notable transactions in 2024 and projects 2025 as a potentially robust year for M&A, especially regarding heritage brands.
In summary, while 2024 presented a challenging landscape for mergers and acquisitions in the luxury sector due to market slowdown, this set the stage for strategic reassessments among brands. As the economic climate shifts, experts predict an active M&A environment in 2025, particularly for heritage brands seeking investment or partnership opportunities. The interplay between market conditions and consumer sentiment will be crucial in shaping the future of luxury brand transactions.
Original Source: www.voguebusiness.com
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