Mergers and Acquisitions in the Luxury Sector: A Cautious Outlook for 2025
Overview of Current Trends
The landscape of mergers and acquisitions (M&A) in the fashion and luxury sectors has experienced a notable slowdown in recent years, particularly following the post-COVID recovery phase. Despite this deceleration, a recent report from Deloitte reveals that the luxury sector continues to captivate the interest of investors, with approximately 90% expressing a desire to engage in transactions in 2025. However, concerns regarding customs duties loom large, casting a shadow over potential deals.
Insights from Deloitte’s Survey
Deloitte’s forthcoming report, titled “Fashion & Luxury Private Equity and Investors Survey 2025,” is set to be published on September 25. The survey, which encompasses insights from 60 private equity investors and over 114 companies across various luxury segments-including clothing, accessories, watches, jewelry, cosmetics, and luxury automobiles-paints a comprehensive picture of the current M&A climate.
In 2024, the high-end segment recorded 308 deals, a decline from 333 in 2023. This downward trend is indicative of broader economic uncertainties that have affected investor confidence. Notably, the first half of 2025 saw only 162 transactions, a 14% decrease from the previous year, underscoring the cautious approach many investors are adopting.
Key Transactions and Market Dynamics
The luxury goods segment, which constitutes 40.2% of total M&A transactions, has also witnessed a decline, with the number of deals falling by 6.3% in 2024. The clothing and accessories sector remains the most attractive for M&A, accounting for 85 transactions in 2024, down from 105 the previous year. In contrast, the cosmetics and fragrances sector experienced a surge, with deals increasing from 21 to 34, highlighting a shift in consumer preferences.
Prominent transactions in recent years include Prada’s acquisition of Versace for €1.25 billion from the U.S. group Capri, which exemplifies the ongoing consolidation within the luxury market. However, not all proposed mergers have been successful; the anticipated merger between Capri and Tapestry, which owns Coach, ultimately fell through, reflecting the complexities and challenges inherent in high-stakes negotiations.
Investor Sentiment and Future Outlook
Elio Milantoni, a partner at Deloitte, emphasized the ongoing allure of the fashion and luxury sector despite the prevailing macroeconomic and geopolitical uncertainties. “92% of funds are considering transactions in this sector, albeit more cautiously than last year,” he stated. This cautious optimism is reflected in the strategic focus of many investors, with over half directing their attention toward medium-sized companies to foster consolidation within the industry.
The average value of M&A deals in 2024 hovered around €260 million, a slight decrease from the previous year. This trend underscores a growing preference for medium-sized transactions, as investors seek to capitalize on opportunities that align with their strategic goals.
Customs Duties: A Growing Concern
One of the most pressing issues identified in the survey is the impact of customs duties on the luxury market. Eight out of ten investors expressed concerns that rising trade barriers could negatively affect market dynamics. North America, Europe, and Asia are perceived as the regions most vulnerable to these challenges, with 35% of investors citing North America as particularly exposed.
Geographical Insights
Geographically, Europe remains the most attractive region for luxury transactions, with 75% of investors viewing it as the area with the greatest potential. In 2024, Europe accounted for 210 deals, an increase of 14 from the previous year. In contrast, North America recorded only 54 transactions, a significant drop of 23, while the Asia-Pacific region saw a decline to 33 deals, down by 29.
Conclusion
As the luxury sector navigates a complex landscape marked by economic uncertainties and shifting consumer preferences, the outlook for mergers and acquisitions remains cautiously optimistic. While the number of transactions has declined, investor interest remains robust, particularly in medium-sized companies. The challenges posed by customs duties and geopolitical tensions will require careful navigation, but the enduring appeal of the luxury market suggests that opportunities for growth and consolidation will continue to emerge. As the industry evolves, stakeholders will need to adapt their strategies to capitalize on the changing dynamics of this vibrant sector.
