Retail sales experience a big revival

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Before the pandemic, the retail industry was known more for bankruptcies than for successful mergers and acquisitions or large leveraged buyouts.

  • Not anymore: Global retail M&A volume in 2021 reached $ 227 billion as of Dec. 16, a 59% year-over-year increase. This almost follows the broader increase of around 64% across all industries, according to data provided by Refinitiv.

Why is this important: The pandemic may have wiped out foot traffic, but e-commerce is alive and well. And amid a global shift in consumer spending towards service goods, retail sales have hit new highs this year.

Bankers say stay tuned for a more turbo-charged retail transaction volume in 2022.

  • Yes, but: In the short term, we may see a pause in some auction processes – as bidders assess concerns over related supply chains or the emerging variant of Omicron, Kenneth Rosen, partner at Lowenstein, told TBEN. Sandler.

In numbers : Retail private equity activity totaled around $ 13.7 billion in the first three quarters of 2021, surpassing each of the past three full years.

  • Retail transaction valuations hit an average multiple of 12 times earnings in 2021, up from 11 times in the past three years (although sectors such as tech, healthcare, consumer products and media have experienced larger jumps), data from Bain Spectacles de la Capitale.

The big picture: “One of the dynamics that has an absolute impact on M&A activity is one of the most active IPO markets in my industry coverage history,” said Adam Rifkin, director, at TBEN, Managing Director of Guggenheim Securities.

  • This has caused more competition for transactions and contributed to high valuations, he says.

And after: The need for supply chain resilience could lead to mergers and acquisitions, especially among growing midsize companies, said Sean Daugherty, senior managing director of Guggenheim.

  • “The focus is on services, infrastructure and logistics to support retailers,” adds David Shiffman, co-head of Solomon Partners’ global consumer retail group.

The bottom line: “We think 2022 should eclipse 2021,” Shiffman said.

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