Retail M&A deals increase by 30% post-pandemic

According to international law firm, RPC, the number of mergers and acquisitions (M&A) deals in the UK targeting retailers has risen by 30% since before the pandemic.

In 2022, 34 retail M&A deals were announced compared to 26 in 2019. Of the 34 deals in 2022, just eight were takeovers of distressed retail businesses, as rising inflation and interest rate hikes put more retailers under financial strain.

Ecommerce companies comprised over half of the M&A transactions (18) in the last year, as retail businesses continued to invest in developing online retail capabilities and adding to their online brand presence. These strategic deals often allow the acquirer to enhance digital sales channels to broaden their brand’s appeal with new demographics. Of the remaining retail M&A deals, two-fifths (13) involved omnichannel retailers while three deals involved pure bricks and mortar retailers.

RPC co-head of retail & consumer brands, Karen Hendy, said: “The combination of inflation and lower consumer confidence have inevitably hit retailers with weaker balance sheets. These retailers are now being snapped up by the sector’s stronger players, with acquirers looking longer term, past the peak interest rates.

“Deals involving distressed businesses have helped prevent some important brands and retailers disappearing. The investment in a business that often results from an acquisition can be crucial in preserving jobs that might otherwise be lost.”

“The economic downturn has encouraged all retail businesses to look more closely at whether their non-core assets should be put up for sale. The better capitalised companies are using that trend to acquire more assets in segments they see as strategically important.”

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