Value Creation Through M&A in the Personal Luxury Goods Industry: A Case Study of LVMH and Its Peer’s Performance and M&A Strategies

Abstract

Mergers and acquisitions (M&As) have served as popular corporate strategies utilized to attain growth or other advantageous objectives. This usually involves one company buying or merging with another to expand or diversify. However, there are risks and challenges involved, so careful planning is necessary to ensure success. M&As are just one of many options for a company's strategic vision.

The M&A activity of LVMH Moët Hennessy Louis Vuitton (LVMH), a leading conglomerate in the luxury goods industry, has become a topic of interest as this sector further solidifies its dominant position in the global market. This paper centers on the personal luxury industry and employs a case study approach of LVMH to investigate the primary drivers and motives for adopting M&A strategies. It explores the potential synergies that arise from such a strategy and the capacity for value creation associated with M&As. In order to gain a better understanding of the performance of LVMH, a comparative analysis including other luxury conglomerates like Kering, Richemont, and Esteé Lauder as part of the peer group was conducted. Furthermore, this paper discusses different approaches to measuring value creation in M&As, highlighting the advantages and disadvantages of each approach. By revealing insights into the motivations and value drivers behind the continued pursuit of the M&A strategy, by conglomerates in the luxury industry like LVMH, the conclusions drawn in this paper help to understand this business approach better.