United States

More deals, more bankruptcies expected for retail


Expectations for mergers and acquisitions in the consumer goods and retail sector for the short term are high, according to Mergers & Acquisitions’ Mid-Market Pulse (MMP).

The challenges retailers face, including striking a balance between e-commerce services and brick-and-mortar stores, are driving consolidation in the sector. For example, discount footwear purveyor DSW Inc. agreed in February to buy Ebuys Inc. for $62.5 million, in part to expand online. In addition, some retail activity is being fueled by distressed companies. Sports Authority Inc. filed for bankruptcy protection in early March, following the 2015 filings of American Apparel Inc. and RadioShack. Other retailers are taking steps to avoid bankruptcy and protect themselves in the event of bankruptcy. For instance, Sears Holding Corp. has announced moves it hopes will enhance liquidity, including taking out a new loan, selling assets and closing stores.

The MMP, published by Mergers & Acquisitions in partnership with RSM US LLP, is a forward-looking sentiment indicator that monitors deal-making professionals’ expectations for M&A activity within the middle market over the coming three- and 12-month periods.

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