M&A and fashion: only 41% of retail operations exceed one billion

Health outranks retail. 41% of mergers and acquisitions in the retail sector exceeded one billion euros (1.1 billion dollars) in the last five years, according to the latest Corporate M&A Report 2020 report, published by Bain & Company.

Retail thus becomes the seventh sector by the size of sales. The ranking is led by health, where 75% of sales transactions exceed one billion euros. Technology is next on the list, consumer products, telecommunications, and the industrial sector.

One of the biggest operations that Bain refers to is the purchase of Avon by Natura. The Brazilian cosmetics giant finalized the purchase of the US company’s business last January for 2 Billion dollars.

By markets, mergers and acquisitions evolved unevenly in 2019. The volume of operations declined in Europe and Asia, but this started to change in the second half. 

Mergers and acquisitions in 2019 have been sealed by 12.5 times Ebitda

On the other hand, sales in the United States began the year strongly and stabilized during the second half. The overall value of mergers and acquisitions in 2019 was 3.4 trillion dollars.

Political uncertainty, splashed especially by Brexit and the commercial war, has diminished the appetite of large investors in the last year, according to the report. In addition, social factors such as the loss of consumer confidence in the last year have also hampered sales transactions. 

For the next few years, the consultant predicts that mergers and acquisitions will be focused on the field of technology and digitalization. In fact, corporate operations in this segment have taken over 50% of sales.

In parallel, in 2019, mergers and acquisitions have been carried out by 12.5 times the gross operating result (Ebitda), the main indicator to value a company. However, it represents a decrease compared to last year, when sales were made for 13.9 times EBITDA.