The last two decades were filled with M&A operations across the supply chain. But in 2023, the trend could change. Because the period, unfavorable from a financial and manufacturing standpoint, threatens to discourage investors: in these conditions, point out analysts with KPMG to Economia of Il Corriere della Sera, it’s not easy to define the value of manufacturing companies. Already in 2010, large industrials and PE funds had figured out that these types of deals are profitable for them too, beside for large brands. “Smaller sums” (for their standards) are also profitable when they are destined to “many operations” that aggregate manufacturing SMBs. Since 2010, says the report, “investments by PE funds in the Italian Fashion and Luxury segments”, by KPMG, closed with about “100 operations for a value of 2.4 billion euro”.
When looking at newspaper articles one may not feel like the trend is slowing down. Florence just closed two acquisitions. Minerva Hub announced 4. And in these past few days Tommaso Paoli, front-man of Nuo announced similar intentions. The company, that Il Corriere della Sera calls “the business wedding between the Pao Cheng family of Hong Kong and the holding Exor of the Agnelli”, has already entered the fashion segment by creating a synergy with Herno for Montura. Among other future projects, after the expansion in the food segment, Nuo claims to have further ambitions in the fashion industry. “If next year we see a slowdown in consumption and economy – says Paoli -, the strong ones will be have the opportunity to conquer space”.
Forecasts for M&A supply chain operations
The hit will come, with the coming period. “We are seeing the start of macro-economic impacts – says Stefano Cervo, head of private equity at KPMG to L’Economia –. With the volatility of energy and raw material costs, it’s hard to define a price for companies. Moreover, with the increase in interest rates there will be a lower amount of financing available to companies from banks. The first 3 months of 2023 will be complicated, but we do continue seeing operations in the middle-market segment”.
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