LBO Valuation of Marimekko

Noora Elina Koponen & Janne Kari Koivula

Student thesis: Master thesis

Abstract

The present thesis aims to showcase an example of a leveraged buyout valuation in the fashion industry, as the interest towards fashion companies has increased among private equity firms, and the industry shows considerable growth prospects for the upcoming years. Especially in Europe, the mergers and acquisitions activity in the fashion industry has increased over the recent years. However, there is very little research on the LBO investments in the fashion segment, and thus it offers an intriguing field to examine. In order to assess the return possibilities in the industry from a PE perspective, we will apply the LBO model on a hypothetical target, using the case study method. The case company, Marimekko, is a renowned Finnish lifestyle house with global ambitions. The valuation will be based on the company’s strategic drivers and industry outlooks. To conclude the results derived from the analysis, we establish that Marimekko would not offer an attractive LBO target for a PE firm. The weak results are most probably due to the funding structure with low leverage, and the company’s excellent year in the stock markets prior to the buyout, which boosted the acquisition price. Thus, the research does not offer a sufficient example for fashion industry buyouts at large.

EducationsMSc in Economics and Business Administration, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages145
SupervisorsSøren Plesner