Private Equity EMEA-19mag

Global Fashion &
Luxury market
Private Equity and
investors survey 2016
Contents
Executive Summary
Key market trends
M&A Deal Monitor 2015
15
Private Equity and investors survey 2016
22
About Deloitte and its Fashion & Luxury practice
34
Executive summary
Global Fashion & Luxury market: Private

Equity and Investors Outlook 2016
The Global Fashion & Luxury Market: Private
Equity and Investors Outlook 2016 survey
conducted by Deloitte Financial Advisory analyzes
the main trends that, according to the interviewed
investors, are expected to characterize the
performance of this industry in 2016.
In general, prospects are very good for players in
the Fashion & Luxury market; as a matter of fact,
also merger & acquisition deals show signs of
recovery in all areas of the luxury goods industry
that have been considered.
Global Fashion & Luxury market: Key market

trends
In 2015, sales in the Luxury market reached US$
~1.2 trillion, growing by 14.8% (+5% at constant
rates) over the last year mainly thanks to the Hotels
and Cars sectors.
The Personal Luxury Goods sector, which accounts
for 28.2% of the total market, has grown by
12.9% (2.0% at constant rates).
The average turnover of Fashion and Luxury
companies is US$ 3.6 billion, excluding the Car
sector (avg. US$ ~33 billion).
Players in the Personal Luxury Goods sector record
average sales of around US$ 5 billion per year.
The Personal Luxury Goods sector is the best
performing area of the Fashion & Luxury industry:
its average margins account for 22.5% of sales
compared to an average performance of 17.3%
in Fashion & Luxury. The worst-faring companies
are those operating in the Yachts sector as their
margins are far below the general average (~2.5%).
In 2016, the four main trends that characterize
this sector and are impacting on the evolution
of the reference industry are as follows: digital
revolution, craftsmanship, contemporary fashion,
and consolidation of the new fashion capitals.
The positive performance of the Apparel &
Accessories sector is driven by Shoes segment as
well as by the stable growth of Ready-to-Wear
goods. The factors that negatively impact on the

sector performance are the drop in Leather Goods
sales, the increasingly strong competitive pressure
of Premium Fashion Brands and a slowdown in the
expansion of the Retail channel.
Luxury jewelry is the best performing sector in the
Fashion & Luxury industry as a result of a growing
interest of high-worth consumers and thanks to
the positive performance achieved in the Branded
Jewelry segment, which offset the drop in sales
recorded in the Watches segment.
The Cosmetics & Fragrances sector is growing,
mainly thanks to the development of cosmetics in
the Make-up category, especially for the High-End
segment. The Fragrances sector is characterized by
a positive trend driven by increasing prices.
The Automotive industry is showing signs of
recovery; this phenomenon is particularly evident
in North America and Western Europe and is
linked to the expansion of the High-End segment
which takes away significant market shares from
the Premium segment. The recent economic
and financial turbulence has slowed down the
development of the Asian and Russian markets.
The demand for Luxury accommodation is growing
in Europe, especially in large cities.
Performance is stable in the Furniture sector, as
it is driven by the European market performance.
Growth opportunities have been identified in the
Asia-Pacific area and in the Middle-East, where
global players are scarcely present.
The Private long-range Jets segment is expanding.
The North American market is recording the best
results in this segment.
The demand for new Yachts is showing a slight
increase; the segment of custom-built yachts is
growing and the American market is showing signs
of recovery. The high-performance yacht segment
is still suffering; yacht demand shows a limited
penetration, especially in emerging markets.
A positive performance is expected for Luxury
Cruise sector, driven by an increase in production
capacity in 2016.
Fashion & Luxury M&A deals in 2015

In 2015, around 141 M&A deals focused on the
larger Fashion & Luxury industry were carried out,
of which 48% (67 deals) were finalized in the
Personal Luxury goods sector.
The sectors that recorded the highest number
of deals are: Hotels (51), Apparel & Accessories
(33), Cosmetics & Fragrances (19) and Watches &
Jewelry (15). The remaining 23 transactions took
place in the Yachts & Private Jets and Furniture
sectors.
In 2015, 47% of the finalized deals had an average
value below US$ 100 million, whereas it exceeded
US$ 500 million in 18% of cases. The average value
per transaction was US$ 426 million.
The largest transactions value above US$ 500
million were finalized in the Private Jets, Hotels
and Cosmetics & Fragrances sectors. The average
value per transaction in the Personal Luxury Goods
sector was US$ 278 million.
81 deals (57%) were finalized in Europe, mainly in
the Apparel & Accessories (27 deals) and Hotels (24
deals) sectors. 35 transactions (25%) were carried
out in North America, of which 15 in the Hotels
sector. 13 transactions (9%) were finalized in the
Asia Pacific region, of which 6 in the Hotels sector
and 5 in the Watches & Jewelry sector.
In 2015, around 70% of the acquired companies
recorded sales below US$ 100 million, whereas
10% recorded sales above US$ 500 million.
The average sales of the companies acquired in

2015 amounted to US$ 425 million. The largest
players operated in the Apparel & Accessories (avg
US$ 663 million) and Hotels (avg US$ 572 million)
sectors, whereas the target companies operating in
the Furniture and Yachts sectors were smaller (avg
US$ 67 million and US$ 34 million, respectively).
In 2015, 50% of the deals were executed by
Financial Investors, who are generally more inclined
to invest in the Personal Luxury Goods sector;
the remaining half of deals were carried out by
strategic investors operating in the Apparel &
Accessories, Fragrance & Cosmetics, Hotels and
Yachts sectors and more interested in consolidating
their position in their respective sectors.
In 2015, 66% of exits were carried out by Strategic
Sellers who sold their business to investment funds;
Financial Sellers finalized 64% of transactions with
strategic investors.
The main strategies adopted by Financial Bidders
were Growth Capital (49%) and Buyout (64%)
strategies, whereas Business Consolidation
strategies (used in 6.6% of all transactions) were
adopted almost exclusively by Strategic Investors.
Overall, 77% of all finalized transactions resulted
in the acquisition of a majority stake in the target
company.
35% of the finalized deals achieved a 15x EBITDA
multiple, mostly in the Hotels sector (driven also by
the presence of property assets), whereas 20% of
the deals achieved a 5-10x EBITDA multiple.
Fashion & Luxury Private Equity and

Investors Outlook 2016
Around 60% of investors maintain they own assets
in the Fashion & Luxury industry characterized by
a majority stake and an average duration generally
below 5 years.
In 2015, the main strategies developed to support
the creation of economic value from owned
Fashion & Luxury assets were as follows:
development of new distribution channels - 60%;
penetration of new geographical markets - 51%;
improvement of operational performance through
actions to increase efficiency - 37%;
development of new products - 29%.
44% of investors foresee at least one exit from
their F&L portfolio in 2016, mainly driven by
the opportunity to achieve high returns on the
investment made.
53% of all respondents forecast an increase of over
5% (of which 15% with double-digit growth) in
the Fashion & Luxury market in 2016, driven by the
positive trends predicted in the following sectors:
Cosmetics & Fragrances (on the increase according
to 69% of investors), Furniture (60% of investors),
Apparel & Accessories (59%), Cars (54%):
the sectors which attract the highest percentage
of negative forecasts although they are fewer
than positive forecasts are as follows: Yachts
(25% predicting a decrease vs 30% predicting
an increase), Private Jets (22% - decrease vs 39%
- increase), Cruises (21% - decrease vs 41% increase) and Selective Retailing (21% - decrease
vs 69% - increase);
investors with assets in the F&L industry have
better expectations, compared to potential
investors who do not own F&L assets, as regards
the Cosmetic & Fragrances and the Apparel &
Accessories sectors.
The geographies where investors expect growth in

2016 are the Asia-Pacific region (excluding Japan),
the Middle East and North America, whereas
Europe should remain stable. Investors forecast a
negative trend for Latin America and Japan.
In 2016, 76% of respondents plan to make at least
one investment in the Fashion & Luxury industry,
more specifically in the following sectors: Apparel &
Accessories (75%), Cosmetics & Fragrances (48%),
Furniture (39%).
Investors interested in F&L maintain:
in 72% of cases, that they intend to acquire
target companies with a turnover below US$ 100
million; 10% of investors plan on investing in
companies with sales above US$ 500 million;
that they intend to carry out new transactions in
this industry through Expansion Capital strategies
(63%), Leverage buy-out strategies (61%)
and Management buy-out strategies (54%),
mainly acquiring a majority stake in the target
organization;
that they intend to fund the investment using
mainly senior debt (80%).
The average return expected from investments in
the Fashion & Luxury industry is very high; 70%
of respondents expect investments to have an
IRR exceeding 20%. The Personal Luxury Goods
sectors are considered as the most profitable
ones by investors, as confirmed by the business
performance of the companies analyzed.
The highest returns are expected from large-sized
organizations; as a matter of fact, around 35%
of investors expecting an IRR above 20% plan on
acquiring companies with sales above US$ 100
million.
Methodological approach
Main contents
Key market trends
M&A deal monitor
PE & investors survey
Size of global market in 2015
Size of M&A deals in 2015 classified by sector
Analysis of the current portfolio of

assets operating in the reference
market
Analysis of the main guidelines

implemented with reference to
Analysis of market trends by sector Analysis of target company profiles
the existing portfolio to create
economic value
State of the market in 1Q 2016
Analysis of investor profiles
Analysis of the exit strategies forecasted for 2016
2016 market outlook
Analysis of the characteristics of

deals carried out at global level
Outlook and investment strategies

for 2016
Altagamma Foundation
Merger Market
Online survey based on CAWI

(Computer Assisted Web Interviewing)
Annual financial report and presentation of major players
Thomson M&A
Interviews with executives operating in the PE sector
Interviews with opinion leaders in

the industry
One Source
Analysis of the business performance of the major market players

classified by sector
Sources
Mint Global
Company press releases
Geographical footprint
Global
scope
Primary data level
Sectors covered
Apparel & Accessories | Watches & Jewelry | Cosmetics & Fragrances | Cars | Hotels | Furniture | Private Jets | Yachts | Cruises
Market segments
The survey focuses on the Premium segments in the sector, defined on the basis of quantitative (e.g. price point) and qualitative (e.g.
interviews with industry experts) parameters.
Key market trends
Global Luxury Market in 2015

In 2015, sales in the Luxury market reached US$ ~1.2 trillion, growing by 14.8% (+5% at constant rates) over
the last year mainly thanks to the Hotels and Cars sectors.
Global Luxury Market 2015
(B$; %)
0.2%
0.8%
1,188
3.6%
5.6%
6.2%
Cars
Cruises
Yachts
Private Jets
Furniture
19.6%
Cosmetics & Fragrances

Watches & Jewelry
Apparel & Accessories
Hotels
Cars
45.2%
YoY
14-15
11.5%
Hotels
2,3%
16.4%
Luxury market trend

(CAGR 12-15; %)
10.6%
Private Jets
9.5%
Total luxury
market
9.1%
Cruises
7.2%
Apparel &
Accessories
Cosmetics &
Fragrances
6.7%
6.0%
YoY @k
14-15
+17.3%
+7.0%
+15.4%
+8.0%
+16.7%
-1.0%
+14.8%
+5.0%
+14.3%
+4.0%
+14.7%
+2.6%
+13.6%
+1.0%
Furniture
4.6%
+10.3%
+4.0%
Watches &
Jewelry
4.5%
+8.0%
-3.0%
+2.0%
-1.0%
Yachts
1.3%
2015
Source: Data from Altagamma Worldwide Luxury Market Monitor.
Key Fashion Business Trends in 2016

Four key trends are influencing the Fashion industry and consequently the strategic and operational choices of
organizations.
Key business trends
Digital Revolution
Craftsmanship
Contemporary fashion
Fashion capitals
Highlights
The booming of digital is modifying companies distribution channels for the

front-end market and business models for product development and supply
chain.
The research of quality and exclusivity from end users encourages fashion
luxury corporations to invest in craftsmanship, influencing production and
design competencies and skills.
The upsurge of Contemporary Fashion segment, represented by emerging

designers launching their own start-ups.
The global growth of mature and emergent fashion capitals, driven by the
economic growth of emerging markets, offering the possibility of geographical
expansion to key players in the industry.
Global Luxury Market Outlook

Cars
Key attractions: This sector benefits from the positive

trend of the shoes category, particularly in the US
and China, which is driven by increasing consumer
demand in the high-end market segment.
Key attractions: Luxury Cars continue on their

growth path, driven by progressive recovery in the
automotive industry. The performance of the U.S.
market and recovery in Western Europe stand out as
particularly positive.
Stable growth in the Ready-to-Wear sector, driven

by the by now consolidated performance of the
Womenswear segment.
Lifestyle and Iconic brands are growing strongly
and achieving positive results in all goods categories
The off-price channel continues on its development
path; it is used by industry players as a strategic tool
to differentiate their offering based on different
demand segments.
Key concerns: Leather Goods are losing market
shares because of greater consumer loyalty volatility
in the aspirational goods segment, which results
from the sharp price increases recorded over the last
few years. Increase in competitive pressure among
Premium Fashion Brands in the High-End segment.
Expansion slowdown in the Retail sector. In many
cases, players limit themselves to the acquisition
of distribution networks managed through joint
ventures in Asian markets.
+3.5%
Outlook 2016
The high-end segment (2.2% of all automotive

sales) is strongly expanding, driven by an extension
of the range of products and services offered: new
entry-level models (bridge categories) launched to
take away market shares from premium players and
greater customer service differentiation in order to
maximize operating margins.
Key concerns: The Asian market is under scrutiny
because of its unsatisfactory results, which are
a direct consequence of economic and financial
turbulence. The Russian market has still not been
recovered.
+8.0%
Outlook 2016

Key attractions: The ongoing development of the
Make-up category drives growth in the Cosmetics
sector, thus offsetting the poor performance
of Skincare products. The positive trend in the
Fragrances segment is supported by the good
performance of the high-end segment; especially
handcrafted products are on the increase.
What stands out is the expansion of Asian players
- that take market shares away from large groups
in the local markets - coupled with increasing
demand, therefore attracting potential private capital
investment.
Key concerns: Despite the significant role of
promotional initiatives, the main growth driver in the
Fragrances segment is represented by price increases
in mature markets, which are somewhat resistant to
product innovation.
+4.0%
Outlook 2016

8
Cruises
Hotels
Key attractions: The increase in production capacity

expected to take place in 2016, as a result of
the delivery of new cruise ships, will be a key
development driver for this sector.
Key attractions: The European market is driving

the sectors performance, which is characterized
by a significant increase in the demand for luxury
accommodation in large cities.
In particular, the slow cruises - i.e. cruises on

smaller ships offering alternative routes to larger
ships - segment looks promising.
Service differentiation according to different cultural

and generational needs may represent a potential
lever for business expansion in the future.
The expectations as to demographic and income

trends support the growth expected in this sector.
Key concerns: Declining performance in the United

States and the Asian market, which is struggling to
find a path towards sustainable development.
Key concerns: Potential market risk associated with

a failure to saturate the new capacity expected for
2016.
Competitive pressure is increasing in the sector as a

result of the entry of new players and the emergence
and consolidation of new online accommodation
platforms, which are becoming more and more
widespread in the high-end segment.
+2.5%
+5.0%
Outlook 2016
Outlook 2016
Furniture
Private Jets
Key attractions: This sector has a not yet fully

exploited growth potential in the Asia-Pacific and
Middle-East market.
Key attractions: The long-range Jets segment (54%

of the total market) is growing and drives the
performance of the entire sector.
The Living & Bedroom and Lighting categories are

showing an interesting performance, whereas the
Kitchens segment is recovering.
North America is the main market showing signs of

strong expansion.
Key concerns: The performance of the entire sector is

influenced by the by now stable trend in Europe, i.e.
the major market worldwide
Key concerns: The performance of the small- and

medium-sized Jets segment is stable.
Concentration in the European market is a potential

risk factor for private capital investments.
+5.0%
Outlook 2016
Competitive pressure is increasing in strongly

developing markets, especially in Emerging Countries.
+6.0%
Outlook 2016

Watches & Jewelry
Yachts
Key attractions: Luxury Jewelry is the best performing

sector as a result of:
Key attractions: Over the last 2 years, the market

trend has indicated a slight recovery in the demand
for new yachts.
Growing interest from high-worth consumers who

consider jewels, because of their intrinsic features,
as an alternative investment to protect themselves
against global economic and financial turbulence.
Growth in the custom-built segment (recreational

crafts over 50-60 mt) and in some niche segments
(e.g. expedition craft segment).
The positive trend shown by branded jewelry and

premium price products.
The U.S. market is recovering after some years of

stagnating demand.
The Expansion of jewelry retailers in the Asian

market to the detriment of the lower-performing
watch category.
Key concerns: The high-performance yacht segment

is still suffering as a result of a demand shift mainly
towards full-displacement or semi-displacement hulls.
Key concerns: The decrease in sales in the Watches

segment is resulting in the accumulation of unsold
stock, which is in turn determining a streamlining of
distribution networks.
The boating industry is characterized by a lower

conversion rate in emerging markets resulting from
the development of new consumption models (e.g.
multi- ownership solutions, yachting club houses,
etc.). Demand for yachts is limited compared to the
potential market size.
The appreciation of the Swiss franc is forcing top

players in the Watches segment to reduce list prices,
with an effect on economic performance.
Despite the still growing demand for precious stones,
a deceleration has been observed in this market, in
particular in the Asia-Pacific area.
+3.0%
Outlook 2016
10
+2.5%
Outlook 2016
Business Performance Analysis: Scope of Top Players

The analysis of business performance in the Fashion & Luxury industry was conducted on a panel of 73
companies.
Panel of top players breakdown by sector and geographical area (# ; %)
10
20
100%
20.0%
6
20.0%
30.0%
80%
10
10.0%
8
12.5%
20.0%
73 player
14.3%
16.7%
Break %
50.0%
20.0%
20.0%
60%
40%
90.0%
80.0%
87.5%
60.0%
50.0%
20%
60.0%
85.7%
Asia-Pacific
7%
North America
26%
Europe
67%
66.7%
50,0%
20.0%
16.7%
0%
0%
20%
60%
Watches & Cosmetics &

Jewelry Fragrances
Apparel &
Accessories
Break (%)
40%
27.4%
8.2%
6.8%
80%
100%
Cars
Hotels
Yachts Cruises
Furniture
Private
Jets
11.0%
6.8%
13.7% 9.6% 13.7%
2.7%
Note: Consolidated data on the main corporate groups operating in the reference market are reported, segmented by business area. The
collected data refer only to brands with a premium market positioning.
Source: Data from Altagamma Worldwide Luxury Market Monitor and company financial reports.
In order to analyze the business performance of the main players in the Fashion & Luxury industry,
summary economic and financial data was collected from a panel of 73 companies.
Key
Findings
The panel has been selected considering the size of total revenues of each player and its
representativeness in the analyzed sectors (covered market share). The organizations are mostly based in
Europe and North America, but they generally have a global business scope.
Business Performance Analysis: Revenues of Top Players

F&L top players accounted for around 55% of the total market; Cars and Personal Luxury Goods made up 90%
of the total revenues of F&L top players.
Total revenues of top players in 2014 breakdown by sector (B$; %)
503B$ - 91%
33.5
6.1
4.2
3.4
1.8
326.7
50.9
38.1
87.8
552.5
375.8
(68%)
Other
Luxury
markets
176.7
(32%)
Personal
Luxury
Goods
Apparel &
Accessories
Watches
& Jewelry
Cosmetics &
Fragrances
Cars
Hotels
Private Jets
Yachts
Furniture
Cruises
Total
15.9%
9.2%
6.9%
59.1%
6.1%
0.6%
1.1%
0.8%
0.3%
100.0%
Top players
51.5%
Mkt Share (%)
74.5%
65.3%
70.2%
16.9%
25.6%
44.4%
8.9%
96.8%
53.4%
Break (%)
Source: Data from Altagamma Worldwide Luxury Market Monitor and company financial reports.
In 2014, the total revenues recorded by the industry top players equaled around US$ 553 billion, of
which 60% was represented by Luxury Cars and 32% by Personal Luxury Goods.
Key
Findings
An analysis of the market shares held by the selected top players has highlighted the high level of
concentration characterizing Fashion & Luxury sectors, where some organizations hold over 50% of the
global market share. The Furniture sector appears to be highly fragmented.
11
Business Performance Analysis: Average Sales per Top Player

Average sales reported by Fashion & Luxury companies equaled US$ 3.6 billion, excluding the Cars sector (avg.
US$ ~33billion). Personal Luxury Goods players reported an average yearly turnover of around US$ 5 billion.
Average sales of F&L top players in 2014 breakdown by sector (B$)
Personal Luxury
Goods (PLG)
32.7
Other Luxury
markets
6.7
Avg. F&L 7.6B$
6.3
5.1
Avg. PLG 4.9B$
4.4
Avg. F&L 3.6B$

(cars excl.)
3.1
Cars
Hotels
Cosmetics &
Fragrances
Watches
& Jewelry
Apparel &
Accessories
Private Jets
0.6
0.4
0.4
Yachts
Furniture
Cruises
Source: Data from company financial reports.
Fashion & Luxury top players reported a turnover of US$ 7.6 billion; the average figure was significantly
influenced by the size of holdings in the Cars sector, where the average turnover was US$ 32.7 billion; if
this sector is excluded, then the average drops to US$ 3,6 billion.
Key
Findings
The companies operating in the Yachts, Furniture and Cruises sectors were generally small-sized
(average sales around US$ 500 million). On average, companies in the Personal Luxury Goods sector
had a turnover of around US$ 5 billion.
Business Performance Analysis: Profit Pool of Top Players

Personal Luxury Goods were the most profitable industry sector, with margins averaging 22.5% of sales. The
situation in the Yachts sector proved more difficult as players reported margins way below the general average
(2.5%).
Average operating profit of F&L top players in 2014 breakdown by sector (%)
24.8%
22.5%
Avg. PLG
22.5%
16.9%
15.3%
13.9%
Avg. F&L
17.3%
12.4%
8.9%
Personal Luxury
Goods (PLG)
8.8%
2.5%
Apparel &
Accessories
Watches
& Jewelry
Cosmetics &
Fragrances
Cars
Hotels
+5 pp
Cruises
Private Jets
Furniture
Other Luxury
markets
Yachts
Key
Findings
12
Profitability in Personal Luxury Goods companies was around 5 percentage points higher than the
general Fashion & Luxury average. The best performing sectors were Apparel & Accessories (24.8%)
and Watches & Jewelry (22.5%). Yacht shipyards reported margins that were clearly lower than those
reached in the other sectors, with a 2.5% average operating profit.
Attractiveness of Fashion & Luxury Sectors

Apparel & Accessories and Watches & Jewelry are the top performing Fashion & Luxury sectors, both in terms
of average turnover growth (+7.6%) and operating margins (24%). The Cars sector is recovering; strong
growth in the Private Jets sector.
Mapping of Luxury sectors by business performance
18
Private Jets
High growth
markets
Personal
Luxury Goods
Stars
markets
Other Luxury
markets
Turnover growth 2012 - 14

(CAGR % | avg. 7.3%)
15
Market size
Furniture
Watches &
Jewelry
9
Cars
Apparel &
Accessories
Cruises
6
Yachts
Hotels
Cosmetics &
Fragrances
Lower performer
sectors
0
0
10
15
20
Mature
markets
25
30%
Average operating profit FY14

(Percentage | avg. 17.3%)
13
14
M&A Deal Monitor 2015
Overview of global M&A deals in Fashion & Luxury - 2015

Overview by sector
Global
13%
100%
Yachts
Furniture
6%
11%
5%
9 deals
15 deals
33 deals
7 deals
51 deals
Watches & Jewelry
23%
5%
36%
19 deals
141 deals
Private jets
Hotels
7 deals
Overview by geography
North America
Europe
100%
29%
35 deals
(25%)
Other
11%
17%
App&Acc
Cos&Fra
43%
Hotels
81 deals
(57%)
Rest of the World
Other
30%
Hotels
33%
App&Acc
6 deals
(5%)
33%
Hotels
33%
App&Acc
2015
Asia-Pacific
100%
15%
Cos&Fra
38%
Wat&Jew
46%
Hotels
Yachts
2 deals
(1%)
Hotels
Wat&Jew
100%
50%
75%
Cos&Fra
Cos&Fra
16%
17%
Middle East
100%
4 deals
(3%)
100%
25%
12%
2015
2015
25%
Japan
100%
50%
Furniture
13 deals
(9%)
Private
Jets
2015
2015
2015
Relevant deals in 2015
Date
November
July
April
June
June
December
September
December
March
January
Target
Starwood
hotels
P&G
Coroin Ltd
Center
Parcs
Douglas
Holding
FRHI Hotels
Landmark
aviation
Pepe Jeans
Hypermarcas
The Net-A-Porter
Group Ltd
Bidder
Marriot
Intern.
Coty
Constellation
Hotels
Brookfield
partners
CVC
Accor
BBA
aviation
M1 Group
Coty
YOOX SpA
~12
~12
~4.7
~3.7
~3
~3
~2
~1
~1
~0.8
Value (B$)
Note: In the Relevant deals in 2015 list are included both announced and closed deals.
15
Size of the Main M&A Deals

In 2015, the Fashion & Luxury industry recorded around 141 M&A deals globally, of which 48% focused on
Personal Luxury Goods and 36% on the Hotels sector.
Number of deals in 2015 breakdown by sector (# ; %)
7
9
51
141
74
(52%)
Other
Luxury
markets
67
(48%)
Personal
Luxury
Goods
19
15
33
Break (%)
Apparel &
Accessories
Watches &
Jewelry
Cosmetics &
Fragrances
23.4%
10.6%
13.5%
Hotels 1
36.2%
Yachts
Private Jets
Furniture
Total Fashion
& Luxury
6.4%
5.0%
5.0%
100.0%
Note: The analysis includes the main M&A deals finalized in the Fashion & Luxury industry during 2015, excluding IPOs; the analysis takes into
consideration also transactions aimed at acquiring players in the Fashion & Luxury value chain as strategic suppliers and selective retailers;
(1) The analysis does not include deals having the purchase of tangible assets (real estate) as sole purpose
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases.
During 2015, around 141 M&A transactions focused on the larger Fashion & Luxury sector were carried
out globally; 48% of these deals (67 deals) involved Personal Luxury Goods companies.
Key
Findings
Because of the uncertainty characterizing global markets, investors turned to companies with substantial
property assets, i.e. Hotels (representing 36% of total transactions), in order to protect themselves
against economic and currency fluctuations. Deals were distributed as follows among the remaining
sectors: Yachts 6.4% (9 deals), Private Jets 5.0% (7 deals) and Furniture 5.0% (7 deals).
Breakdown of Deals by Average Deal Value

In 2015, 47% of deals had an average unit value below US$ 100M. The deals with a unit value above US$
500M represented 18% of all transactions, of which 2/3 with a value exceeding US$ 1B.
Breakdown of deals by deal value (%)
100%
11%
7%
34%
47%
< 100M$
100-500M$
500M$ - 1B$
> 1B$
Total Fashion
& Luxury
Note: The average deal value has been calculated excluding the transactions for which no specific condition details are available
Source: Data from Merger Market, Thomson M&A, One Source, Mint Global and company press releases,
Key
Findings
16
In 2015, around 47% of M&A transactions had an overall value below US$ 100M. 50% of these deals
focused on target companies operating in Personal Luxury Goods sectors. The deals with a unit value above
US$ 500 million accounted for 18% of all transactions. In 2015, top deals i.e. deals with value exceeding
US$ 1 billion represented 11% of transactions and were concentrated in the Hotels sector (65% of deals).
The high deal value in this sector results from the very features of the transaction, which focuses on the
acquisition of the business AND the purchase of the property assets owned by the target company
Average Value of Main Deals by Sector

In 2015, the average value per deal equaled US$ 426M; the deals with a value above average were finalized in
the Private Jets (US$ 2B), Hotels (US$ 573M) and Cosmetics & Fragrances (US$ 498M) sectors.
Average value per deal in 2015 breakdown by sector (M$)
Personal Luxury
Goods (PLG)
2,065
Other Luxury
markets
573
498
Avg . F&L
426M$
297
182
Avg. PLG
278M$
100
18
Private Jets 1
Hotels
Cosmetics &
Fragrances
Apparel &
Accessories
Watches
& Jewelry
Furniture
Yachts
Note: The average deal value has been calculated excluding the transactions for which no specific condition details are available; the
analysis excludes some deals which represented outliers, as they would not allow a reliable analysis of sector averages.
(1) The value reported for the Private Jets sector refers to a single transaction, for which economic and financial details are available.
In 2015, the most sizable acquisition deals were finalized in the Private Jets and Hotels sectors, with an
average value per deal greater than US$ 500 million.
Key
Findings
The average deal value in the Apparel & Accessories sector equaled US$ 297 million - i.e. 0.7 times the
average value of the whole Fashion & Luxury industry; this was mainly a consequence of the strong
focus of investors on small-sized (low-turnover), fast-growing target companies. The same applies to the
Watches & Jewelry sector.
Geographical Distribution of Deals

In 2015, 57% of deals (81) were finalized in Europe, 25% (35) in North America and 9.2% (13) in the AsiaPacific region.
Deals finalized in 2015 breakdown by sector and geographical area (# ; %)
24.8%
35
3
3
4
4
6
15
Wat & Jew

App & Acc
Cos & Fra
Hotels
North
America
Deal per
settore
7
5
10
Hotels
27
App & Acc
1.4%
Private Jets
Wat & Jew
Hotels
Rest of
the World
Furniture
Deal per
settore
Yachts
Watches & Jewelry
Private Jets
Furniture
Middle
East
Asia-Pacific
4.3%
Wat & Jew

Cos & Fra
App & Acc
Hotels
Hotels
Deal per
settore
Cos & Fra
Yachts
1
Deal per
settore
Europe
9.2%
13
Wat & Jew

Cos & Fra
24
Deal per
settore
2.8%
57.4%
81
3
5
Deal per
settore
Hotels
Japan
17
Average Size of Target Companies

In 2015, around 70% of the acquired companies reported sales below US$ 100 million and 10% exceeded
US$ 500M.
Distribution of target companies across revenue classes (%)
100.0%
6.0%
4.8%
67% under 100 M$

9.6%
14.5%
10% over 500 M$
15.7%
16.9%
32.5%
<25M$
25-50M$
51-100M$
101-250M$
251-500M$
501-1,000M$
>1,000M$
Total Fashion
& Luxury
Note: The analysis is based on a sample of target companies for which official turnover figures as at the end of FY 2014 were available.
In 2015, investments in the Fashion & Luxury industry were focused mainly on smaller-sized organizations:
around 67% of the target companies had a turnover below US$ 100 million
Key
Findings
Only 10% of the total number of deals involved organizations with sales exceeding US$ 500 million.
The main giant deals were as follows:
Acquisition of Starwood Hotels by Marriot International (deal value ~12-13B$).
Agreement between Procter&Gamble and Coty concerning the transfer of 43 haircare brands to the
multinational Perfumes company (deal value ~12.5B$).
Acquisition of the Douglas perfumery chain by the CVC Capital Partners private equity fund (deal value
~3B US$).
In 2015, the average turnover reported by the acquired companies equaled US$ 425M; most deals involving
big companies were executed in the Apparel & Accessories and Hotels sectors.
Average turnover of the acquired companies by sector (M$)
Personal Luxury
Goods (PLG)
663
Other Luxury
markets
572
276
Avg. PLG
453M$
Avg. F&L
425M$
227
214
67
Apparel &
Accessories
Hotels
Private Jets
Watches
& Jewelry
Cosmetics &
Fragrances
Furniture
34
Yachts
Note: The analysis is based on a sample of target companies for which official turnover figures as at the end of FY 2014 were available.
The average turnover reported by the companies acquired in 2015 equaled around US$ 425M, or US$
453M if only Personal Luxury Goods companies are considered.
Key
Findings
18
Large-sized target companies were concentrated in the Apparel & Accessories (avg. US$ 663M) and Hotels
(avg. US$ 572M) sectors.
Bidder Profile
In 2015, 50% of deals were executed by Financial Investors, of which around 90% were Private Equity
investors; the remaining half of deals were carried out by Corporate investors operating in the Fashion & Luxury
industry...
Investor profile in PE exits (%)
100.0%
Strategic
investor
100.0%
4.3%
10.0%
100.0%
Other investors
Real Estate
50.0%
Financial
investor
50.0%
Bidder type
Strategic
investor
50.0%
Venture Capital/
Private Equity
85.7%
Financial
investor
Investor profile in Strategic exits (%)
Bidder sector
50.0%
Bidder type
100.0%
8.6%
Other industries
25.7%
Other F&L
sectors
10.0%
Yachts
20.0%
Hotels
10.0%
Fragrances &
Cosmetics
25.7%
Apparel &
Accessories
Bidder sector
Note: A deal with undisclosed Bidder name has been excluded from this analysis.
Key
Findings
In 2015, the main bidders in 50% of the executed deals were Financial Investors, represented by Private
Equity funds in ~90% of cases. 50% of transactions were carried out by Strategic Investors, of which
25.7% were large corporate investors operating in the Apparel & Accessories sector, 10.0% were investors
operating in the Fragrance & Cosmetics business, and 20.0% specialized in the Hotels sector. 8.6% of
deals were executed by investors operating in sectors external to the Fashion & Luxury industry.
...in particular, an analysis of investment strategies shows that PE investors were mostly interested in Personal
Luxury Goods companies, whereas large corporations tended to invest in their own sector.
Type of exit broken down by target company sector (propensity idx)
Strategic investor
Propensity (Idx 100)
Financial investor
propensity (Idx 100)

Watches & Jewelry
Fragrances & Cosmetics
Hotels
Furniture
Private Jets
Yachts
Cruises
Note: The propensity index has been calculated by comparing the exit strategy mix in each sector with the general average observed in the
analyzed sample, weighted according to deal concentration in that sector in 2015.
Key
Findings
The analysis of acquisition strategies confirms that Private Equity funds despite an increased focus
on experiential luxury sectors (e.g. Hotels) still show a propensity to invest in Personal Luxury Goods
companies. The most significant deals included: The acquisition of Pepe Jeans, - the Spanish premium
jeans brand - by M1 Group and L Capital Asia; The acquisition of Twin-Set an Italian player in the
premium App&Acc sector - by The Carlyle Group.
The remaining Fashion & Luxury sectors mainly attracted Strategic Investors adopting consolidation and/or
business growth strategies.
19
Exits by Seller Type

In 2015, 66% of exits were executed by Strategic Sellers selling their business to investment funds; Financial
Sellers executed 64% of transactions with strategic investors.
M&A market by investor type (%)
Seller
Buyer
34%
Sponsor to Sponsor
Financial Seller
45 deals
66%
Strategic Seller
92 deals
Spo
Stra nsor
teg to
ic
tegic
Stra nsor
o
p
S
50%
17 deals (36%)
53 deals (57%)
Financial Investor
71 deals
to
50%
30 deals (64%)
Strategic Investor
66 deals
Strategic to Strategic
40 deals (43%)
Weight on total deals per seller type
Note: A deal with undisclosed Bidder name has been excluded from this analysis.
Key
Findings
In 2015, 66% of exit transactions were executed by Strategic Sellers; in 57% of these deals, the
counterparty was a Financial Investor (Strategic to Sponsor), whereas in 43% of deals the counterparty
was a Strategic Investor (Strategic to Strategic). Financial Sellers executed most deals with strategic
investors; 30 Sponsor-to-Strategic transactions were finalized (representing 64% of Financial Sellers).
Main Investment Strategies of Bidders

Most finalized deals were based either on a Growth Capital or a Buyout strategy as underlying logic and
were mainly aimed at the acquisition of a majority stake.
Deal breakdown by investment strategy (%)
% Financial
investor
3.6% 1.5%
3.6%
6.6%
20.4%
64.2%
Growth capital
49%
Buyout
64%
Consolidation
11%
Turnaround
80%
Recapitalisation
Merger
Deal breakdown by sector and equity stake (%)
100%
37%
63%
80%
100%
100%
100%
11%
19%
89%
81%
100%
100%
100%
100%
23%
56%
100%
100%
100%
77%
44%
Minority
Majority
0%
Apparel
& Accessories
Watches
& Jewelry
Cosmetics
& Fragrances
Hotels
Furniture
Private
Jets
Yachts
Total Fashion
& Luxury
Note: This analysis is based on a sample of 91 target companies for which information about the equity stake in the target company acquired through the transaction was available.
Key
Findings
In 2015, 64.2% of deals were based on a growth capital strategy, followed by 20.4% based on a buyout logic, of which 64% were
executed by Private Equity funds. Business consolidation strategies accounted only for 6.6% of all deals mainly executed by Strategic
Investors (around 90%). 80% of turnaround and recapitalization deals were executed by Private Equity funds.
Overall, 77% of the finalized deals were aimed at the acquisition of a majority stake in the target company; deals aimed exclusively at the
acquisition of a majority stake were executed in some sectors, such as Furniture, Private Jets and Yachts.
It should be noted that 56% of the deals finalized in the Watches & Jewelry sector resulted in the acquisition of a minority stake.
20
Analysis of EBITDA Multiples Achieved on the Main Deals

An analysis of the EBITDA multiples achieved in this industry confirms the premium value assigned by investors
to Fashion & Luxury companies; an EBITDA multiple greater than 15x was achieved on 36% of transactions.
Deal breakdown by EBITDA multiple in 2015 (%)
100.0%
36.0%
36.0%
20.0%
8.0%
<5x
5-10x
11-15x
>15x
Total Fashion
& Luxury
50% in
Hotels sector
Note: This analysis is based on a sample of 31 companies for which information about the EV/EBITDA multiple assigned to the target
company was available.
Key
Findings
An analysis of the Enterprise value/EBITDA multiple achieved on a sample of deals for which transaction
details had been disclosed, confirms the premium value assigned by investors to Fashion & Luxury players:
36% of all deals were closed with a multiple greater than 15x.
The companies operating in the Hotels sector proved to be the best performing ones in 2015. 50% of
target companies were valued above 15x, mainly thanks to the mark-up associated with property assets
A 5-10x EBITDA multiple was achieved on 36% of deals.
21
Private Equity and

Investors Survey 2016
Profile of Survey Respondents
Profile of Investors Participating in the Survey

90% of survey respondents are global Private Equity Funds, of which 44% have assets between EUR 100 and
500 million.
Profile of survey respondents (%)
100.0%
100.0%
Other
investors 1
10.2%
Private
Equity
100.0%
20.0%
> 1B
24.0%
500M 1B
89.8%
44.0%
12.0%
Rest of the
world
24.2%
North
America
53.0%
Europe
100M 500M
< 100M
Funds net asset
Investor type
22.7%
Geographical presence
(1) The other investors category includes: Family offices, Luxury Holding firms, Pension funds, Sovereign Wealth funds.
Source: Deloitte survey.
90% of the investors participating in the survey are Private Equity funds, of which 44% manage assets for
a total value between US$ 100 and 500 million and 24% have assets between US$ 500M and 1B. 20%
of the funds in the survey have total assets exceeding US$ 1 billion. The geographical scope of the funds
considered in the survey encompasses mainly Europe and North America.
Key
Findings
65% of survey respondents are investors based in Europe; in 41% of cases they are Managing Directors and/or
Partners.
Investor location (%)
Asia
9.3%
Investor role (%)

Other role Other role
Asia
7.4%
7.4%
Investment Investment
manager manager
16.7%
16.7%
9.3%
North
North
America 25.9%
America 25.9%
40.7%
64.8%
Managing director
/ director /
Managing
Partner
Partner
40.7%
64.8%
Europe
Europe
35.2%
35.2%
Director / Principal
Director / Principal
Key
Findings
Survey respondents are based mainly in Europe (64.8%) and North America (25.9%). In order to ensure
the global representativeness of the sample, also some investors based in the Asian market mainly in
China, Hong Kong and Singapore - (9.3% of total respondents) have been interviewed.
The main top management roles in Private Equity funds have been involved in the survey, e.g. Managing
Directors & Partners (40.7%), Directors & Principals (35.2%) and Investment managers (16.7%).
23
Profile of Investors Participating in the Survey

Around 60% of investors have at least one Fashion & Luxury asset in their portfolio, but only 23% of them say
they specialize in this industry.
Asset portfolio focus on the F&L industry (%)
100.0%
At least one F&L asset in
the investment portfolio
40.7%
22.9%
High
(> 25% of AuM)
40.0%
Medium
(5-25% of AuM)
37.1%
Low
(< 5% of AuM)
59.3%
No F&L assets in the

investment portfolio
Portfolio focus
on the F&L industry
Note: AuM is the acronym for Assets Under Management.

Key
Findings
Around 60% of respondents say they manage at least one Fashion & Luxury asset in their investment
portfolio. Around 23% of investors say they are highly focused on Fashion & Luxury. In general, the level of
concentration in this industry is medium to low, as a matter of fact 80% of the sample maintain that the
assets they own cover max. 25% of the current portfolio.
The sectors in which respondents say they have most of their F&L assets are: Apparel & Accessories (71.4%),
Furniture (48.6%), Watches & Jewelry (30%) and Cosmetics & Fragrances (27%).
Breakdown by investment sector of assets managed by investors (%)
71.4%
48.6%
Furniture
34.3%
30.0%
28.6%
27.0%
Watches & Jewelry
Cosmetics &
Fragrances
Selective Retailing
Other F&L
sectors1
% of respondents = 59.3
(1) The other sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises.
Key
Findings
24
71% of respondents who maintain they have at least one Fashion & Luxury asset in their portfolio
concentrate their investments in the Apparel & Accessories sector. Among the remaining sectors, the ones
in which respondents invest the most are as follows: Furniture (48.6%), Watches & Jewelry (30%) and
Cosmetics & Fragrances (28.6%). The analysis shows that investors are focused mainly on Personal Luxury
Goods companies.
Investors maintain that in ~72% of cases the Fashion & Luxury assets in their portfolio have sales below US$
100M, whereas 20% of them own medium-sized assets (companies with sales between US$ 100 and 250M).
Average turnover of Fashion & Luxury assets in investors portfolios (%)
71.4%
5.71%
2.86%
100.00%
>500 M$
Total
F&L Investors
20.00%
22.86%
28.57%
20.00%
<25M$
25-50M$
51-100M$
101-250M$
251-500M$
71.4% of the assets in the current portfolio of investors have a turnover below US$ 100 million
Key
Findings
Only 20% of the considered sample invests in medium-sized companies, whereas only 8% has stakes in
large-sized organizations.
25
2016 Market Outlook

Features of the Current F&L Portfolio
Around 60% of investors say they own one Fashion & Luxury asset characterized by a majority stake and an
average duration below 5 years.
Equity stake and average duration of Fashion & Luxury assets (%)
100.0%
40.7%

> 5 years
Minority
59.3%

71.4%
28.6%
68.6%
31.4%
Majority
< 5 years
Investors with F&L

assets in their portfolio
71.4% of respondents maintain they have a majority stake in the Fashion & Luxury companies present in
their investment portfolio; this figure is in line with data referring to deals finalized in 2015 (77%).
Key
Findings
In most cases (68.6%), the average duration of Fashion & Luxury assets present in the current portfolio of
investors is below 5 years.
The development of distribution channels, internationalization, and performance improvement are the main
strategies adopted by investors to promote the growth of their Fashion & Luxury assets.
Adoption of main key strategic drivers (%)
Main drivers
Creation of a new
distribution channel
60.0%
Internationalization
strategy
51.4%
Performance
improvement
37.1%
New Product
Development
28.6%
Change in
management
22.9%
Brand line
Extension
22.9%
Brand
re-positioning
Value chain
vertical expansion
Financial restructuring
and/or leverage
20.0%
14.3%
11.4%
Key
Findings
26
In 2015, the main strategies used to create economic value from the assets owned were:
Development of new distribution channels - 60%
Penetration of new geographical markets - 51%
Improvement of operational performance through actions to increase efficiency - 37%
Development of new products - 29%
Exit Strategy for 2016

In 2016, 44% of investors foresee at least one exit from their F&L portfolio in 2016, mainly driven by the
opportunity to achieve high returns on the investment made.
Exit drivers (%)
100.0%
No exit in 2016
At least one
exit in 2016
55.9%
44.1%
Divestments
in 2016
Exit strategy (%)

100.0%
100.0%
21.1%
Other
strategies 1
26.3%
Closing
investment
period
52.6%
High returns
opportunity
Exit driver
55.9%
44.1%
Divestments
in 2016
100.0%
8.3%
37.5%
54.2%
Exit strategy
Expected multiple (%)

100.0%
100.0%
IPO
Secondary
buyout
Trade sale
55.9%
73.3%
> 10x
26.7%
< 10x
44.1%
Divestments
in 2016
Expected
EBITDA multiple
% of respondents = 58
(1) The other strategies category includes: Change in investment strategy and Mismatch of Market Trends versus the investment thesis scenario.
Key
Findings
44% of investors maintain they intend to sell some of the Fashion & Luxury assets currently in their portfolio
during 2016. Moreover, the respondents say that the possibility of maximizing the return on their investment
(according to 52.6% of the sample) as a matter of fact, 73% of investors expect to achieve EBITDA
multiples above 10x and the completion of the investment cycle (26.3%) will be the main incentives to
exit in 2016. Trade sales (54.2%) and secondary buy-outs (37.5%) are likely to be the most popular exit
strategies.
27
2016 Fashion & Luxury Market Outlook by Sector

53% of respondents forecast an increase of over 5% in the Fashion & Luxury market in 2016. The best growth
expectations are observed in the Cosmetics & Fragrances and Furniture sectors.
Expected market trends in 2016 - breakdown by sector (%)
100%
100%
4%
10%
Strong
increase
(>10%)
Increase
(5-10%)
Stable
(0-5%)
Decrease
(<0%)
100%
100%
6%
14%
42%
49%
100%
40%
4%
21%
4%
Apparel & Watches & Cosmetics Selective

Accessories Jewelry & Fragrances Retailing
59%
46%
46%
69%
10%
100%
7%
23%
100%
5%
100%
8%
36%
45%
49%
43%
39%
27%
16%
100%
11%
39%
33%
37%
100%
29%
48%
45%
55%
38%
Positive
sentiment
100%
2%
9%
45%
38%
38%
32%
22%
25%
21%
Total F&L
market
53%
7%
7%
9%
Cars
Hotels
Furniture
Private
Jets
Yachts
Cruises
54%
50%
60%
39%
30%
41%
9%
53% of all respondents forecast a growth in the Fashion & Luxury market during 2016; 15% of them (i.e.
8% of all respondents) predict the increase will exceed 10%.
Key
Findings
According to over 50% of respondents, the Cosmetics & Fragrances, Furniture, Apparel & Accessories, Cars
and Hotels sectors will grow by over 5%, whereas around 10% of them forecast a double-digit trend.
Some difficulties are expected in the Yachts and Private Jets sectors, in which according to 25% of
respondents a negative trend will develop over the next year.
Investors with assets in the F&L industry anticipate better results in the Apparel & Accessories, Cosmetic &
Fragrances and Cars sectors.
Expected market trends in 2016 - breakdown by sector (%)
100%
100%
13%
100%
14%
47%
Investors with
assets in the
Fashion &
Luxury industry
52%
100%
3%
41%
38%
40%
100%
11%
40%
39%
100%
5%
32%
32%
11%
100%
8%
11%
100%
5%
100%
10%
100%
100%
100%
100%
100%
100%
15%
11%
11%
11%
16%
20%
40%
35%
10%
+2%
+33%
Strong increase (>10%)
26%
42%
47%
22%
33%
39%
33%
37%
28%
28%
5%
Cars
Hotels
Furniture
Private
Jets
Yachts
Cruises
+3%
-14%
-24%
-5%
-6%
+4%
Increase (5-10%)
44%
40%
21%
5%
26%
-4%
11%
100%
6%
63%
26%
Apparel & Watches Cosmetics Selective

Accessories & Jewelry & Fragrances Retailing
+15%
58%
35%
100%
8%
42%
43%
14%
12%
37%
46%
23%
17%
35%
38%
100%
7%
27%
17%
35%
100%
5%
50%
39%
13%
45%
100%
4%
23%
36%
48%
6%
50%
Delta positive
sentiment
48%
100%
4%
69%
29%
Investors not
operating in the
Fashion &
Luxury industry
100%
8%
Stable (0-5%)
16%
8%
Total F&L
market
+1%
Decrease (<0%)
Note: The positive sentiment delta represents the difference expressed as a percentage between investors operating, and those not operating,
in the F&L industry who expect a market growth.
Fonte: Deloitte Survey.
28
2016 Fashion & Luxury Market Outlook by Geographical Area

Asia, the Middle East and North America will be the main growth markets in 2016, driving the performance of
the entire industry; the trend is expected to remain mainly stable in Europe.
Expected market trends in 2016 - breakdown by geographical area (%)
100%
2%
Strong
increase
(>10%)
Increase
(5-10%)
Stable
(0-5%)
Decrease
(<0%)
Positive
sentiment
100%
100%
12%
7%
33%
100%
4%
100%
24%
30%
100%
20%
100%
3%
37%
14%
45%
44%
33%
36%
8%
47%
52%
51%
100%
47%
23%
24%
45%
11%
15%
16%
38%
47%
20%
3%
9%
Europe
North
America
Latin
America
Japan
Asia
Middle
East
Rest of
the World
Global
F&L market
35%
64%
44%
28%
75%
64%
50%
53%
Key
Findings
The geographical areas that are expected to experience the strongest growth in 2016 are Asia, the MiddleEast and North America: over 60% of respondents expect that growth will exceed 5% in these areas.
The best performances are expected in the Asian market, where 30% of investors predict a double-digit
growth. The respondents do not seem to agree on Japan: 28% of them predict a positive trend for 2016
and 24% expect a contraction of the market.
The majority of respondents expect the trend to remain stable in Europe over the next year.
Investors with assets in the F&L industry anticipate better results in Europe and Latin America.
Expected market trends in 2016 - breakdown by geographical area (%)
100%
3%
Investors with
assets in the
Fashion &
Luxury industry
100%
14%
12%
45%
52%
13%
15%
34%
100%
10%
100%
100%
24%
25%
70%
52%
52%
14%
10%
11%
100%
16%
22%
100%
100%
6%
100%
39%
28%
39%
100%
7%
46%
36%
29%
52%
35%
100%
100%
8%
53%
44%
40%
40%
11%
12%
59%
28%
39%
33%
38%
33%
6%
6%
28%
22%
24%
Europe
North
America
Latin
America
Japan
Asia
Middle
East
+33%
+4%
+9%
-8%
+4%
-10%
Strong increase (>10%)
100%
4%
43%
36%
52%
15%
Delta Positive
sentiment
100%
4%
22%
36%
39%
100%
Investors not
operating in the
Fashion &
Luxury industry
100%
Increase (5-10%)
Stable (0-5%)
7%
8%
Rest of
the World
Total F&L
market
-6%
+1%
Decrease (<0%)
Note: The positive sentiment delta represents the difference expressed as a percentage between investors operating, and those not operating,
in the F&L industry who expect a market growth.
Fonte: Deloitte Survey.
29
2016 Investment Strategy

Expected Investments in F&L in 2016
In 2016, 76% of investors plan to carry out new transactions in the Fashion & Luxury industry. Personal Luxury
Goods will remain the most attractive target thanks to higher growth performance and margins than the rest
of the industry.
Propensity to invest in Fashion & Luxury assets in 2016 and main target sectors (%)
75.0%
47.7%
38.6%
34.1%
25.0%
20.5%
24.1%
75.9%

Apparel &
Accessories
Cosmetics &
Fragrances
Furniture
Selective
Retailing
Watches
& Jewelry
Other F&L
sectors1
Current investor
in F&L
69.7%
71.4%
64.7%
66.7%
44.4%
54.5%
New investor
in F&L
30.3%
28.6%
35.3%
33.3%
55.6%
45.5%
(1) The other F&L sectors category includes: Cars, Hotels, Private Jets, Yachts and Cruises.
The respondents who plan to invest in the Fashion & Luxury industry (76% of all respondents) will focus on the
Apparel & Accessories sector (75% of respondents).
Key
Findings
Investors show strong interest also in the Cosmetics & Fragrances sector, where around 50% of the sample
plans to finalize at least one deal. The main sectors expected to attract investments over the next year
include Furniture, Selective Retailing and Watches & Jewelry; the latter draws a large number of investors
from different industries (other than F&L) who are attracted by the increase in sales and operating margins
characterizing this sector. General propensity to invest in Personal Luxury Goods companies.
Propensity to invest in the various F&L sectors tends to be similar among investors with or without assets in the
F&L industry.
Propensity to invest in Fashion & Luxury assets in 2016 and main target sectors (%)
76.7%
50.0%
Investors with
assets in the
Fashion &
Luxury industry
36.7%
33.3%
13.3%
Apparel &
Accessories
Cosmetics &
Fragrances
Furniture
42.9%
42.9%
Cosmetics &
Fragrances
Furniture
Selective
Retailing
20.0%
Watches & Jewelry Other F&L sectors 1
71.4%
Investors not
operating in the
Fashion &
Luxury industry
Apparel &
Accessories
30
35.7%
Selective
Retailing
35.7%
35.7%
Watches & Jewelry Other F&L sectors 1
Size of Potential Investments in F&L

Investments in the Apparel & Accessories sector will target large-sized organizations in 27% of cases, whereas
deals in the other sectors will focus mainly on mid-market companies.
Average sales of potential target companies breakdown by sector (%)
100%
6%
6%
15%
100%
100%
10%
11%
100%
6%
6%
100%
7%
13%
9%
47%
55%
53%
45%
14%
21%
Cosmetics &
Fragrances
20%
Watches
& Jewelry
251 - 500M
101 - 250M
9%
29%
14%
6%
500 - 1B
41%
33%
44%
100%
2%
8%
19%
29%
44%
Apparel &
Accessories
100%
12%
7%
Furniture
Selective
Retailing
27%
Other F&L
Sectors1
51 - 100M
20%
25 - 50M
< 25M
11%
Total F&L
market
Key
Findings
The survey shows an investor propensity to acquire large organizations in the Apparel & Accessories
sector, which will be the main target sector in 2016; more specifically, 27% of respondents plan to invest
in companies with sales over US$ 100M. 80% of respondents planning to carry out M&A deals in the
Cosmetics & Fragrances, Watches & Jewelry and Furniture sectors will select small to medium-sized target
companies with a turnover below US$ 100M.
Deal Characteristics: Deal Type and Equity Stake

Around 60% of investors plan to carry out new transactions in the market using Expansion Capital, Leverage
Buy-out and Management Buy-out strategies to acquire a majority stake in the target company.
New investments breakdown by deal type and equity stake (%)
63.2%
61.4%
54.5%
20.5%
18.2%
Expansion
capital
LBO or
Replacement
Support to
MBO/MB
Corporate
carve-out
Other
strategies 1
Minority stake
37.0%
18.5%
16.7%
33.3%
8.3%
Majority stake
63.0%
81.5%
83.3%
66.7%
91.7%
(1) The other strategies category includes: Turnarounds and Start-up Financing.
Over 50% of respondents plan to finalize new acquisitions in the Fashion & Luxury industry through
Expansion Capital, Leverage Buyout and Management Buyout strategies.
Key
Findings
Investors anticipate acquiring a majority stake in the target company through most of the transactions
carried out.
31
Deal Characteristics: Financing Strategy

67.5% of respondents say they will buy a stake greater than 40%, using mainly senior debt to fund the
transaction.
Equity stake to be acquired in the new asset (%)
Funding sources (%)
100.0%
80%
23.3%
43%
44.2%
27%
23%
18.6%
9%
14.0%
0 - 20%
21 - 40%
41 - 60%
> 60%
Total
Senior debt
Shareholders Vendors notes Mezzanine

loan
or convertible financing
bonds
Other types 1
(1) The other types category includes: Junior Debt, Unitranche and Equity.
~67% of transactions will result in the acquisition of a stake of more than 40% in the target company.
Senior debt will be the main funding source for acquisition deals in the Fashion & Luxury industry.
Key
Findings
32
The other main funding sources mentioned by investors include Shareholders loans (43%), Vendors notes
or convertible bonds (27%) and Mezzanine Financing (23%).
Return Expected From New Investments

The IRR expected from new investments in the Fashion & Luxury industry is between 20% and 30%, as
confirmed by the past business performance of top players in this industry.
Internal Return Rate expected from new F&L investments breakdown by sector (%)
100%
9%
100%
10%
68%
60%
100%
20%
100%
100%
13%
11%
56%
56%
31%
33%
100%
10%
100%
12%
40%
50%
57%
> 30%
50%
30%
23%
Apparel &
Accessories
30%
21-30%
31%
< 20%
Cosmetics &
Fragrances
Watches
& Jewelry
Furniture
Selective retailing
Other F&L
sectors 1
Total F&L market
Key
Findings
On average, investors expect the new investments in the Fashion & Luxury industry to have an IRR
between 21% and 30%. The best performing sector in terms of average profitability - is expected to be
Watches & Jewelry, for which around 20% of respondents forecast an IRR greater than 30%, as confirmed
by an analysis of the business performance of top players.
The highest returns are expected from large-sized organizations; 35% of the investors who forecast an IRR
above 20% plan to invest in companies with sales above US$ 100M.
Target turnover size (M$)
Internal Return Rate expected from new F&L investments breakdown by target company size (%)
29.5%
70.5%
6.5%
23.1%
9.7%
19.4%
Big Companies
account for
35.6% of high
return investments
38.5%
35.5%
500 - 1B$
251 - 500M$
101 - 250M$
23.1%
16.1%
51 - 100M$
25 - 50M$
15.4%
12.9%
< 20%
< 25M$
> 20%
Expected IRR (%)
33
About Deloitte and its

Fashion & Luxury Practice
Deloitte EMEA Fashion & Luxury Center of
Excellence
A Network of 65 cross-functional Subject Matter
Experts (SME) with competence in the Fashion &
Luxury industry able to suit diverse client needs.
Our Top Offerings

Core business transformation & Global retail
Transformation
CRM & Digital Transformation
Marketing & Sales Strategy Operations
Contract Risk and Compliance
Countries involved
France - Germany - Italy - Netherlands - Spain Switzerland - Turkey - United Kingdom.
Main Objective
Cross-border cooperation to leverage on specific local
expertise to deliver high level services to Fashion &
Luxury clients and targets across Europe.
Risk Analytics
Internal Controls
Internal Audit Services
Sustainability
Corporate Finance Advisory
Strategy & Business Planning
Transaction Services
Forensic
Transfer prices supply chain
Custom duties/vat/logistic tax issues supply chain
Data privacy
Personal planning for private family
Global Fashion & Luxury: Glossary
34
Personal Luxury Goods
Personal Luxury Goods include the following

sectors: Apparel & Accessories, Cosmetics &
Fragrances and Watches & Jewelry
F&L
Abbreviation for Fashion & Luxury
App&Acc
Abbreviation for Apparel & Accessories
Cos&Fra
Abbreviation for Cosmetics & Fragrances
Wat&Jew
Abbreviation for Watches & Jewelry
PLG
Acronym for Personal Luxury Goods
IRR
Acronym for Internal Return Rate
PE
Acronym for Private Equity
M&A
Acronym for Merger & Acquisition
Contacts
Deloitte Fashion & Luxury Leaders
Deloitte Financial Advisory contacts
EMEA Fashion & Luxury Leader

Patrizia Arienti | parienti@deloitte.it
China
Ivan Man Kit Wong | ivawong@deloitte.com.hk
Olderigo Fantacci | ofantacci@deloitte.com
France
Benedicte Sabadie | bsabadiefaure@deliotte.fr
Germany
Karsten Hollasch | Khollasch@deloitte.de
Italy
Patrizia Arienti | parienti@deloitte.it
Netherlands
Victor Hoong | vhoong@deloitte.nl
Spain
Juan Jos Peso | jpeso@deloitte.es
Victoria Lopez Tellez | vlopeztellez@deloitte.es
France
Claire Deguerry | cdeguerry@deloitte.fr
Germany
Karsten Hollasch | Khollasch@deloitte.de
Italy
Elio Milantoni | emilantoni@deloitte.it
Tommaso Nastasi | tnastasi@deloitte.it
Spain
Roberto Martinez Roldan | rmartinezroldan@deloitte.es
Turkey
Hakan Gol | hgol@deloitte.com
Switzerland
Howard Da Silva | hdasilva@deloitte.ch
Andreas Gehre | agehre@deloitte.ch

UK
Richard Lloyd-Owen | rlloydowen@deloitte.co.uk
Mark Pacitti | mpacitti@deloitte.co.uk
UK
Nick Pope | nipope@deloitte.co.uk
US
Lorin DeMordaunt | ldemordaunt@deloitte.com
Switzerland
Karine Szegedi | kszegedi@deloitte.ch
Singapore
Jiak See Ng | jsng@deloitte.com
Heath Snyder | hsnyder@deloitte.com
Il nome Deloitte si riferisce a una o pi delle seguenti entit: Deloitte Touche Tohmatsu Limited, una societ inglese a responsabilit limitata
(DTTL), le member firm aderenti al suo network, e le loro entit correlate. DTTL e ciascuna delle sue member firm unentit giuridicamente
separata e indipendente dalle altre. DTTL (descritta anche come Deloitte Global) non fornisce servizi ai clienti.
Si invita a leggere linformativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member
firm allindirizzo www.deloitte.com/about.
2016 Deloitte Touche Tohmatsu Limited

Studio Grafico Deloitte, Italia - SG.051.16

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Global Fashion &

Key market trends

M&A Deal Monitor 2015

Private Equity and investors survey 2016

About Deloitte and its Fashion & Luxury practice

Global Fashion & Luxury market: Private

Global Fashion & Luxury market: Key market

goods. The factors that negatively impact on the

Private Equity and investors survey 2016

Fashion & Luxury M&A deals in 2015

The average sales of the companies acquired in

Fashion & Luxury Private Equity and

The geographies where investors expect growth in

Private Equity and investors survey 2016

Key market trends

M&A deal monitor

PE & investors survey

Size of global market in 2015

Size of M&A deals in 2015 classified by sector

Analysis of the current portfolio of

Analysis of the main guidelines

Analysis of investor profiles

Analysis of the exit strategies forecasted for 2016

2016 market outlook

Analysis of the characteristics of

Outlook and investment strategies

Online survey based on CAWI

Annual financial report and presentation of major players

Interviews with executives operating in the PE sector

Interviews with opinion leaders in

Analysis of the business performance of the major market players

Primary data level

Key market trends

Global Luxury Market in 2015

Cosmetics & Fragrances

Luxury market trend

Source: Data from Altagamma Worldwide Luxury Market Monitor.

Key Fashion Business Trends in 2016

The booming of digital is modifying companies distribution channels for the

The upsurge of Contemporary Fashion segment, represented by emerging

Private Equity and investors survey 2016

Global Luxury Market Outlook

Key attractions: This sector benefits from the positive

Key attractions: Luxury Cars continue on their

Stable growth in the Ready-to-Wear sector, driven

The high-end segment (2.2% of all automotive

Cosmetics & Fragrances

Source: Data from Altagamma Worldwide Luxury Market Monitor.

Key attractions: The increase in production capacity

Key attractions: The European market is driving

In particular, the slow cruises - i.e. cruises on

Service differentiation according to different cultural

The expectations as to demographic and income

Key concerns: Declining performance in the United

Key concerns: Potential market risk associated with

Competitive pressure is increasing in the sector as a

Key attractions: This sector has a not yet fully

Key attractions: The long-range Jets segment (54%

The Living & Bedroom and Lighting categories are

North America is the main market showing signs of

Key concerns: The performance of the entire sector is

Key concerns: The performance of the small- and

Concentration in the European market is a potential

Competitive pressure is increasing in strongly