cretionary spending slumps. In contrast, other acquisitions by private entities have resulted from voluntary administration. Recently publicly listed Bapcor, which owns the Autobarn, Autopro, Burson and Midas chains, received an unsolicited indicative offer to buy out by private equity firm Bain Capital at $5.40 per share, which equated to approximately $1.8 billion after the share market closed on June 7. Going public A strong initial public offering (IPO) can be achieved through strong private investment, like in the case of fast-food chain Guzman y Gomez, which raised $135 million of pre-IPO funding earlier this year, valuing the business at $18 per share or $1.76 billion.  The business was able to float on the ASX with an IPO OF $22.00 per share and $18 per share for its franchisees’ offer. This week Guzman Y Gomez shares debuted on the ASX at $30, which represents a 36 per cent gain from its IPO. The IPO of Guzman y Gomez is one that “dealmakers will be watching closely,” Andy Hough, partner at Pitcher Partners Sydney told Inside Retail. “Guzman y Gomez debuting on the ASX is the first big IPO in about 18 months for Australia and if it goes well, it might just be the confidence shot that the market needs to lift dealmaking volumes,” Hough said. Like any market, Hough emphasised that over the last 10 years, there have been “peaks and troughs in mergers and acquisitions cycles”. He added that “even if [the company does not go public], the market won’t be down forever,” he said. “Right now, we’re in a trough, but the historical evidence suggests that it won’t last for too long,” Hough said. Private equity funding  If history is anything to go by, Bain Capital’s bid to acquire or invest in a business likely points to an abundance of untapped potential growth. “While it is true that deals done have been few and far between, they continue to build up reserves for investing and they have a defined period to invest and provide investors with a return,” Hough said. “So there will be an uptick in PE deals. Even if it’s not this year, it is coming,” Hough added. In 2005, a group of global private equity firms – Bain Capital Partners LLC, The  Carlyle Group and Thomas H. Lee Partners LP – acquired US coffee chain Dunkin’ Brands Inc from Pernod Ricard SA for US$2.425 billion in cash. Dunkin’ Donuts and its sister franchise, Baskin-Robbins, needed a reinvention, and in 2006 the consortium of PE firms actioned this intervention with changes that included expanding the menu, improving store layouts, and accelerating international expansion. In 2011, the company set its IPO price range between US$16 and $18 per share, and when the stock first traded on the NASDAQ in July 2011 it opened at US$24.97 per share. In 2018, Bain Capital and former BWX CEO John Humble presented an offer to purchase natural skincare company Sukin, owned by BWX at the time for $860 million, but the offer was declined. However, on April 3, 2023, BWX was placed into voluntary administration. Ironically, in January this year, the privately owned company PNB Consolidated, which is led and primarily owned by Humble, acquired Sukin for roughly $70 million. Meanwhile, Bain Capital purchased the airline Virgin Australia from voluntary administration in 2020 and has plans to re-list the private company after a delay in doing so late last year. The evolving Chemist Warehouse and Sigma merger are indications of the big market movements to come, all designed for business growth, one way or another. According to experts, the private equity investment market currently has substantial unspent cash reserves waiting to be invested locally. “With few deals being done, there is pent-up demand. Investors are not seeking for their funds to be returned to them without any assets or growth to show for it,” Hough said. “Followers of the investment market know that private equity has been sitting on vast amounts of dry powder, funds from private investors that need to be invested. “We have seen a few unusual movements occurring, such as PE to PE buyouts, which traditionally they have not been doing a lot of.”  Take Seafolly-owner Bondi Brands Group’s acquisition of Tigerlily from private equity firm Crescent Capital Partners via a deed of company arrangement for a reported $2.3 million earlier this year after the swimwear brand entered voluntary administration in March 2024. Fashionably good investment “There is always an appetite for well-known brands and well-run businesses, and this interest will never drift too far away,” Hough said. Tattarang’s $190 million acquisition of heritage Australian brand RM Williams, from L Catterton in 2020, is perhaps an example of this. According to media reports at the time, the bootmaker had sold for roughly 10 times its annual profit value before the sale. Tattarang also acquired heritage Australian hat brand Akubra in late 2023 and a minority 25 per cent stake in Australian fashion label Camilla in January of the same year. In FY23, Camilla lifted its revenue by 9 per cent to $130 million, which would have reportedly paid the majority shareholder Camilla Franks a dividend of around $20 million. Tattarang, meanwhile, would have received approximately $3 million. As reported by Vouge Business, the $90 million investment in the reinvented Australian fashion brand Dissh by billionaire Brett Blundy via his private investment group BBRC is a prime example of PE investment in the retail sector and is another example of the next cycle of PE growth. This financial year it is estimated that Dissh’s revenue will roughly double to $140 million. BBRC has acquired a 40 per cent stake in Dissh and documents lodged with the Australian Securities and Investments Commission show shares held by the founder Lucy Henry-Hicks’ LHH Corporation were valued at $225 million, and Blundy’s Singapore-based BBFIT Investments holding valued at $135 million. Whilst there are many reasons for PE investments, minority non-controlling stakes aim to accelerate the profitability of companies already exhibiting a significant upward growth trajectory. Dissh quickly carved out a niche in the local market during 2020 with its rebrand and is set to make waves internationally in the US market with BBRC’s backing. Market price Hough said current conditions were “somewhat a market for buyers,” whereas 18 months prior, “sellers were very much in the driving seat,” he said. “Traditionally, PE has been overweight in the retail sector, and although there has been a  few success stories over the years, there have also been some well-known disasters,” Hough said. ASX-listed beauty and wellness company BWX acquired a 50.1 per cent stake in privately owned Go-To Skincare for approximately $89 million in 2021, after the business generated $36.8 million in revenue and an EBITDA of $11.6 million in in FY21. On April 4, a day after BWX was placed into voluntary administration, it was reported that Go-To’s co-founder Zoe Foster Blake offered to buy back the 50.1 per cent stake for $20 million. Bigger picture Despite BWX being a publicly listed company, the mechanics of acquisitions and investments in businesses were designed to increase market share and revenue, an objective of many private investments. “Buyers are being selective in their acquisitions, even those loaded with cash, which is keeping the deal volumes down,” Hough said. “Deals are certainly being discussed across various sectors, such as renewables and around the energy transition, there is a lot of talk but not translating into action,” Hough said. “Baby Boomers own around 40 per cent of all SMEs in Australia, so in the next 10 years that translates to around 1 million business owners looking for an exit. “There are no unique factors affecting the retail market, but in that sector as in others, founders will continue to exit and business leaders will seek to expand their footprint.”