Los Angeles, CA – September 23, 2024 – We are thrilled to announce that Alfredo Barreto Jr., Managing Director, has been featured in the Los Angeles Times as an M&A expert in the Beauty, Fashion, & Consumer Goods industries. The article titled “Ashleigh Barker, Alfredo Barreto, Jr. and Eric Perlmutter-Gumbiner Share Insights on the Business of Beauty, Fashion and Consumer Goods” dives deep into the current trends and future outlook of these industries.
In this piece, Alfredo Barreto, along with other industry leaders, shared his expert perspective on the evolving landscape of beauty, fashion & consumer goods. Here are some of the key takeaways from Mr. Barreto:
- How would you describe the current outlook(s) for the beauty, fashion and consumer goods sectors in 2024? The outlook for the beauty, fashion and consumer goods sectors in 2024 reflects both resilience and challenges. Despite a dip in the University of Michigan’s Consumer Sentiment Index to 68.2 in June, U.S. consumers continue to increase spending, even amid rising inflation, high interest rates and depleted savings. The Index, which surveys 500 households monthly, reflects consumer optimism about the economy and their personal finances. A strong labor market and wage growth, which has outpaced inflation, have bolstered purchasing power. Strategic acquirers are seeking growth through acquisitions, particularly in luxury and better-for-you, healthy brands, which benefit from consumer shifts toward premium products and health-conscious purchases. Despite challenges, the sectors continue to show potential for growth and acquisition opportunities.
- How has the consumer shopping process changed in recent years and how does that affect the industry? In recent years, the consumer shopping process has shifted toward digital platforms, with e-commerce and mobile shopping becoming dominant. Consumers now expect seamless, personalized experiences across multiple channels, driven by AI and data analytics. Social media and influencer marketing have also influenced purchasing decisions, making brand engagement and online presence critical. Convenience, speed and sustainability are now top priorities, with customers preferring fast deliveries and eco-conscious products. For the industry, these changes demand agility and innovation. Retailers must invest in digital infrastructure, enhance customer experience through personalization and maintain strong social media engagement. Brands that adapt to these trends by embracing omnichannel strategies, offering eco-friendly options and leveraging data to meet customer expectations will stay competitive in this rapidly evolving landscape.
- What do investors look for in a health, beauty or consumer goods company these days? Investors and acquirers alike are increasingly focused on companies in the health & wellness, beauty and consumer goods sectors that not only exhibit strong brand loyalty and align with trends like sustainability and premiumization but also have a great organizational structure. A strong leadership team, particularly at the head of customer acquisition and customer success, is crucial for driving growth with a clear value proposition and ensuring long-term consumer loyalty. Financials that demonstrate profitability and a growth trajectory are essential. Acquirers also look for additional revenue lines or potential synergies that can be unlocked post-transaction as well as scalable operations and resilience to economic pressures. Companies that embody these qualities are highly sought after in today’s market.
- What are some of the biggest mistakes that consumer goods companies make, particularly when preparing to sell the business? One common mistake consumer goods companies make when preparing to sell is inadequate preparation. Many underestimate the time needed to clean up financials, streamline operations, and resolve legal or compliance issues, which buyers expect in a well-run business. Another issue is failing to document and protect intellectual property and brand strength, which are often key drivers of value. Without proper protection, trademarks or proprietary processes may diminish the company’s appeal. Additionally, companies overly reliant on a few customers or suppliers face added risk. Diversifying these relationships before a sale can be crucial. Lastly, poorly tracked operational metrics like inventory turnover, margins and cash flow can erode buyer confidence, so consistent KPIs and transparent financials are essential.
- What are the pros and cons of being based in Los Angeles or Southern California in 2024? Being based in Los Angeles or Southern California in 2024 offers distinct advantages and challenges. Pros: The region has a high concentration of consumer and wellness companies, creating a vibrant ecosystem for collaboration, partnerships and access to specialized talent. Southern California’s diverse population provides a broad consumer base, making it ideal for testing products and trends. Additionally, proximity to key international markets, particularly Asia and Mexico, enhances global trade opportunities. Cons: On the downside, the high cost of living and doing business, including rising rents and wages, can reduce profitability. Traffic congestion and logistical challenges also pose operational inefficiencies, especially for supply chain management. Finally, California’s regulatory environment can add layers of complexity to business operations.
- Looking ahead, are there any specific trends that consumer goods companies from manufacturing to retail need to consider? A key trend reshaping the consumer goods industry is the decoupling of manufacturing from China, driven by rising labor costs, geopolitical tensions and supply chain disruptions. Mexico is emerging as a viable alternative, offering proximity to the large U.S. market, cost efficiencies and trade advantages under the USMCA. This shift requires companies to rethink supply chain strategies, emphasizing nearshoring and diversifying production locations to minimize risks. From manufacturing to retail, consumer goods companies must also focus on sustainability, digital transformation and evolving consumer preferences. Demand for eco-friendly products, personalized shopping experiences and faster deliveries is growing. Businesses need to invest in digital platforms, supply chain transparency and omnichannel strategies to meet these expectations. Additionally, reshoring or nearshoring can improve resilience against future disruptions, reduce transportation costs and enable faster response times to market shifts.
- What advice would you give to a mid-market health & wellness, fashion or consumer goods company looking to sell to a private equity or strategic buyer in 2024/2025? For mid-market health & wellness, fashion or consumer goods companies looking to sell to private equity or strategic buyers in 2024/2025, focus on presenting a strong, scalable growth story. Buyers seek companies with resilient revenue streams, solid margins and clear market differentiation. Invest in digital transformation, including e-commerce capabilities and data analytics to showcase your adaptability to changing consumer trends. Highlight any efforts towards sustainability, as ESG (Environmental, Social, Governance) factors are increasingly important to buyers. Operational efficiency and a robust supply chain are also critical, especially with ongoing global disruptions. Ensure your financials are well organized with clean records and projections that demonstrate growth potential. Additionally, consider professionalizing management and processes, positioning the business for a smooth transition post-sale. Engage with experienced advisors to guide you through the process – from valuation to deal structuring – to maximize value and attract the right buyer.
The LA Times article also features perspectives from Ashleigh Barker, Director of Consumer Goods at Lincoln International, and Eric Perlmutter-Gumbiner, Corporate Partner at Greenberg Glusker LLP, adding depth to the discussion and offering a comprehensive view of the industry’s current state and future direction.
Read the full article here.
Stay tuned for more updates and expert analyses from Alfredo Barreto Jr. and our industry practices, as we continue to provide thought leadership in the investment banking and valuation space. To discuss any of the insights from this piece, or to have a confidential conversation about your own sell-side investment banking or valuation needs, contact us today.
Disclosures
The above testimonials may not be representative of the experience of other customers and is not a guarantee of future performance or success.
This news release is for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. Principals of Objective Capital are Registered Representatives of BA Securities. Objective Capital Partners and BA Securities are separate and unaffiliated entities.
