Financial And Strategic Buyers Go Label Shopping
Interest in brand acquisitions has been heating up as financial and strategic buyers look to tap into established revenue streams and loyal customers, while eliminating competitors and reviving undervalued brands. The hot areas for buyouts should be in consumer products, especially consumer packaged goods, and consumer healthcare products, said Bill Johnson, Eastern division president of The Brand Institute, a consulting firm.
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Nick Jachim, managing director KPMG Corporate Finance, said he has seen a pickup in activity for targets in apparel, bath and body care, industrial products and food retailers. He's currently working with three companies considering a sale. One sells private label food products. The other two sell consumer brand products, including fragrances and soaps.
"Brands in good times and bad will always stand the test of time," Jachim said. The value of brands can be realized by buying only the name from the company or buying the entire company with a quality name.
Last week brought a flurry of events related to consumer products M&A. Iconix Brand Group's acquisition of Rocawear from Shawn "Jay-Z" Carter for $205 million. A handful of companies were in the running for the maker of Absolut vodka, Vin & Sprit. And Procter & Gamble's cfo, Clayt Daley, reportedly said he was willing to team up with private equity firms to pursue brands and rivals.
Consumer products companies face a highly competitive market and have little flexibility on price. Those pressures should result in a surge in consumer goods M&A, said Nicole Lynch, a Standard & Poor's director.