To sell or not to sell? That is the question.
The contemporary sector, which was on a hot streak for several years before the recession hit and has been rebuilding, is bustling with mergers and acquisitions activity. Catherine Malandrino is rumored to be negotiating with Kellwood Co., while Andrew Rosen is talking with Proenza Schouler. In the past year or so, Steve Madden Ltd. purchased Betsey Johnson, while Kellwood added Rebecca Taylor and Adam to its contemporary stable, which already includes Vince. VF Corp. has purchased Ella Moss and Splendid; The Jones Group Inc. added Robert Rodriguez and Rachel Roy to its lineup, while Tory Burch took on Mexican investors. Rosen, chief executive officer of Theory Link Holdings, made private investments in firms such as Alice + Olivia, Gryphon and Rag & Bone.
As these brands benefit from larger corporate parents and more financing, other firms mull whether to also seek a buyer or go it alone in the increasingly competitive sector. Industry executives pointed out the three main reasons firms decide to sell their businesses are that they reach a point where they want to start opening retail stores, they want to expand their product offerings and they seek to develop a larger international business. All of these require capital, resources and manpower. A well-financed owner also allows firms more opportunities for marketing and advertising. Of course, the downsides can be giving up ownership and control and, in some cases, losing rights to one’s name and leaving the company they founded altogether.
Firms such as Nanette Lepore, Milly and Tibi — all of which are husband-and-wife run businesses — have chosen to remain independent, which they say allows them to grow at their own pace and call the shots. But the interest from strategic and private equity investors is at a fever pitch.
The contemporary sector, which was on a hot streak for several years before the recession hit and has been rebuilding, is bustling with mergers and acquisitions activity. Catherine Malandrino is rumored to be negotiating with Kellwood Co., while Andrew Rosen is talking with Proenza Schouler. In the past year or so, Steve Madden Ltd. purchased Betsey Johnson, while Kellwood added Rebecca Taylor and Adam to its contemporary stable, which already includes Vince. VF Corp. has purchased Ella Moss and Splendid; The Jones Group Inc. added Robert Rodriguez and Rachel Roy to its lineup, while Tory Burch took on Mexican investors. Rosen, chief executive officer of Theory Link Holdings, made private investments in firms such as Alice + Olivia, Gryphon and Rag & Bone.
As these brands benefit from larger corporate parents and more financing, other firms mull whether to also seek a buyer or go it alone in the increasingly competitive sector. Industry executives pointed out the three main reasons firms decide to sell their businesses are that they reach a point where they want to start opening retail stores, they want to expand their product offerings and they seek to develop a larger international business. All of these require capital, resources and manpower. A well-financed owner also allows firms more opportunities for marketing and advertising. Of course, the downsides can be giving up ownership and control and, in some cases, losing rights to one’s name and leaving the company they founded altogether.
Firms such as Nanette Lepore, Milly and Tibi — all of which are husband-and-wife run businesses — have chosen to remain independent, which they say allows them to grow at their own pace and call the shots. But the interest from strategic and private equity investors is at a fever pitch.
While these brands prefer to remain independent, the likes of Rebecca Taylor, Adam and Vince are pleased they sold their businesses to Kellwood, which has enabled them to expand their retail network and launch new categories.
“Being part of a large organization allows us to benefit from shared resources,” said Beth Bugdaycay, ceo of Rebecca Taylor, citing areas such as human resources; accounting; legal; IT, and customer service. Rebecca Taylor, which was sold to Kellwood in January, expected to be fully integrated by this past June. The company generates between $35 million and $40 million in wholesale volume. “We felt the timing was right to find a strategic partner. We had two objectives: to expand the product we’re offering and to have an accelerated retail rollout. We felt we could get there on our own, but at a much slower pace. We felt it could be faster with a partner.”
Adam Lippes has had two investors since he started his company. Since Kellwood acquired the firm, Lippes has seen improvements in areas such as production, financing, merchandising and sourcing. “It’s been a really great relationship,” he said. Kellwood took over the warehousing and beefed up the back of the house and fabric department.
I brought this article to one of our annual morning meetings last week and found that Leslie was very disappointed in Rebecca Taylor for selling out. Even though she was disappointed in Rebbecca Taylor, she really enjoyed Amy Smilovic's views and ideas of the time & place to sell your company. On a side note Amy Smilovic is from St Simon's, Ga and has one of her stores here on the island. So it was interesting to see Leslie's take on her thoughts since she has met her a couple of times.
“Being part of a large organization allows us to benefit from shared resources,” said Beth Bugdaycay, ceo of Rebecca Taylor, citing areas such as human resources; accounting; legal; IT, and customer service. Rebecca Taylor, which was sold to Kellwood in January, expected to be fully integrated by this past June. The company generates between $35 million and $40 million in wholesale volume. “We felt the timing was right to find a strategic partner. We had two objectives: to expand the product we’re offering and to have an accelerated retail rollout. We felt we could get there on our own, but at a much slower pace. We felt it could be faster with a partner.”
Adam Lippes has had two investors since he started his company. Since Kellwood acquired the firm, Lippes has seen improvements in areas such as production, financing, merchandising and sourcing. “It’s been a really great relationship,” he said. Kellwood took over the warehousing and beefed up the back of the house and fabric department.
I brought this article to one of our annual morning meetings last week and found that Leslie was very disappointed in Rebecca Taylor for selling out. Even though she was disappointed in Rebbecca Taylor, she really enjoyed Amy Smilovic's views and ideas of the time & place to sell your company. On a side note Amy Smilovic is from St Simon's, Ga and has one of her stores here on the island. So it was interesting to see Leslie's take on her thoughts since she has met her a couple of times.
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Lockwood, L. (2011, July 6). Analysis: Sell Or Go It Alone? - Fashion Markets News - WWD.com. Fashion, Beauty and Retail News - WWD.com. Retrieved July 10, 2011, from http://www.wwd.com/markets-news/staying-independent-vs-selling-out-3701351/print/
Lockwood, L. (2011, July 6). Analysis: Sell Or Go It Alone? - Fashion Markets News - WWD.com. Fashion, Beauty and Retail News - WWD.com. Retrieved July 10, 2011, from http://www.wwd.com/markets-news/staying-independent-vs-selling-out-3701351/print/
Week: Five
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