Fashion Dealmaking in the Age of Trump
Dealmakers are an optimistic bunch — it probably helps when you're betting millions or even billions of dollars on a single acquisition.
But even taking that into account, bankers, advisers and would-be buyers came into 2025 feeling pretty good after a couple of slow years.
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That optimism is being tested now that President Donald Trump has unleashed a series of trade wars that are threatening to tangle supply chains and rattling consumers.
Some deals are moving ahead slowly, with strategic acquirers more likely to press on than financial players. But much is on hold.
'Bankers have told us that they had deals they were bringing to market in the first quarter,' said Frank Petraglia, U.S. head of consumer and retail deal advisory and strategy at KPMG. 'They did the work, they put the books together. Our private equity clients told us in December and January they had the books [detailing the financials of a company set to be sold] all ready. They were expecting those books to turn into diligence in the first quarter and deals getting signed around now.
'That hasn't materialized,' he said. 'This is a really difficult environment to sell a business in.'
It's been a sudden change as the set up for the market was pretty good coming into the year.
Inflation and interest rates were both down, consumers were holding steady, there was pent-up demand in the deal market and Trump was expected to sweep back into Washington as president and, in his own chaotic way, push for deregulation and business-friendly tax cuts.
'That's where we were on Christmas morning with mistletoe in our dreams,' Petraglia said. 'We came in feeling pretty bullish about where the M&A activity was going to be.'
The year also started out with a promising flurry of dealmaking.
Stella McCartney bought out LVMH Moët Hennessy Louis Vuitton's stake in her brand; Acon Investments and SB360 Capital Partners snapped up True Religion; P180 acquired Vince Holdings; Marquee Brands bought Laura Ashley, and more.
But the bullishness was also tinged with some uncertainty.
'It was hard to decipher coming out of the election cycle what actually the administration was going to do, versus say, versus plan, versus execute in the first 30, 60, 90 days,' Petraglia said. 'Where we find ourselves today is with a less bullish prognostication for 2025 M&A.'
While Trump was seen as a friend to big business in his first term, this time through he's become a warrior for complete economic transformation. China, Mexico, Canada and Europe have all been swept up in U.S. trade wars, ostensibly intended to rebuild the American manufacturing base.
Although many economists and experts argue against either Trump's vision of the future or his approach to getting there, everyone agrees that he's pushing much harder and is more organized around his vision for America this time through.
But where Trump promised immediate economic improvements on the campaign trail, he has now pivoted and is acknowledging there would be a transition period. The president and his advisers have recently declined to rule out a recession as he remakes the economy.
That change of tone, and efforts to dramatically downsize the federal government, have set the consumer on edge. Consumer confidence has fallen by 22 percent since December, according to the University of Michigan's Surveys of Consumers.
So in the short term, it's harder for businesses to see what demand will be with consumers so skittish. And in the long term, it's harder to see what the costs of tariffs will be.
That confuses all the algorithms experts use to value companies.
'Nobody knows what's going to happen,' Petraglia said. 'There are management teams that believe this sort of blows over and there's a whole lot of noise that eventually will go away. There's another group of management teams that are activating around, 'How am I going to mitigate my margin erosion if my cost structure increases.''
The result is a period of wait and see, with some signs of dealmaking.
Brand management firm WHP Global offered to take Guess Inc. private on Monday in a deal that would value the company at just over $750 million. And on Tuesday, Beyond Inc. said it would sell 75 percent of Zulily to Lyons Trading Co. for $5 million, a quick turn considering Beyond bought the brand for $4.5 million a year ago.
The deals that seem more likely to go through are strategic in nature — where one company buys another with the same kind of business — since both buyer and seller are feeling the same kind of pain.
Investment banker William Susman, managing director of consumer, retail and e-commerce at Cascadia Capital, said: 'We are actively working on late-stage transactions with two industries companies — both have strategic buyers. Conversations are moving forward, but it helps that both parties are in the same position. They understand each other's challenges.'
Susman said he's advising even companies with strong performances lately to wait out the uncertainty for now.
'The dust will settle,' he said. 'But it's a very large assumption that the dust will settle quickly. The administration is showing no sign of listening to CEOs who have repeatedly said, 'Much of our decision-making is on hold.'
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