This week, we take a look at who’s buying fashion brands these days. Private equity firms have started to pull away from fashion, and many founders aren’t interested in selling to them anyway. Instead, licensed brand management companies have significantly increased their fashion acquisitions.Despite the slowing down of capital investment for fashion brands compared to the heyday of the 2010s, acquisitions are still happening. Fashion brands are still getting snapped up, but who’s buying? These days, you’re far less likely to see private equity getting into the fashion game, while licensed brand management companies have drastically stepped up their fashion acquisitions.
While private equity firms are still active, especially in areas like healthcare and food and beverage, their acquisitions of fashion brands have slowed. The number of private equity acquisitions of fashion brands this year has fallen 50% from last year, making up under 7% of all fashion deals announced so far this year, according to data released this week by Capstone Partners’ consumer investment banking group.
So, what’s behind this downturn? In talking to experts this week, it seems the appetite for private equity acquisitions of fashion brands has cooled from both ends. Private equity firms are less interested in fashion brands, which are capital-intensive and sometimes low-margin businesses, than in more easily monetizable targets like software companies. Meanwhile, brand founders are leery of the reputation private equity firms have for radically transforming, often for the worse, the companies they buy.
