Sporting goods retailers – M&A strategies
Consolidation of the sporting goods distribution industry drives M&A surge. The worldwide sporting goods distribution market has experienced strong growth over the last years (+3% CAGR from 2006 to 2012). The market bounced back quickly after the 2009 economic downturn and recovered its pre-crisis levels within a year.
Looking ahead, retail growth will mainly be driven by emerging countries and e-commerce. At the same time, the market is becoming very competitive in developed countries. These trends are creating a lot of M&A opportunities.
Key observations from our research:
- The sporting goods market has outperformed the global economy as well as the retail market, and should continue to deliver above-average growth.
- Transaction multiples have averaged 10x EBITDA and are rising when buyers want to enter new strategic segments. These levels are in line with the overall retail valuation standards. Sporting goods listed companies have also experienced an
- increase in their valuation multiples as well as their market capitalization. For instance, Adidas and Nike were trading around 6 to 7x EBITDA in early 2010 and now trading at 15x and 12x EBITDA respectively.
- E-commerce represents around 6% of total retail sales and accounts for more than 20% of M&A transactions. It has become a crucial strategy for sporting goods companies and is not only a complementary source of revenues, but also a growth driver.