Q1 2021 Update
The Stump team had a strong Q1 performance as the home furnishing industry continued its own impressive growth trends.
Merger and Acquisition interest is high, as evidenced with our recently announced transactions:
- Braxton Culler was acquired by Classic Home: a large global casegoods/lifestyle company acquiring a leading North Carolina better-end upholstery manufacturer.
- We saw broad interest in Braxton Culler from a variety of casegood companies, offshore importers, and other upholstery companies seeking domestic capacity or a step-up in product offering.
- Century Furniture acquired the casegoods business of Marge Carson: Century is continuing its steady growth via acquisitions to build its high-end brand and product portfolio. This move allowed our client Marge Carson to focus on its growing and profitable upholstery business and expand the Tijuana footprint.
- We believe Mexico offers a fantastic value proposition for North American manufacturing.
- A long-time friend, an industry veteran, has hired us to sell or license his trademarked iMotion name for furniture and bedding. We successfully signed a licensing deal with a leading national mattress manufacturer for the bedding trademarks – they are launching the new product line as we speak, using the iMotion name to accelerate customer acceptance and brand recognition.
- The furniture trademark (residential and commercial) and IP are still available - Call us if interested!
- VaughanBenz was acquired by The Mandy Li Collection: a larger global hospitality player acquired a West Coast importer to expand product line and gain access to new customers and pipeline.
- We saw broad interest in this venerable high-end brand as hospitality suppliers anticipate a return to contract spending later in 2021 and 2022.
As one industry friend reminded us, “when you’re on a roll, keep pedaling!” So, …
What’s up for Q2?
We are thrilled to be going to Las Vegas for the market, then returning in late April for the High Point Premarket and returning soon thereafter for the rescheduled June market. Now fully vaccinated, we are excited to (mostly) return to our regular travel patterns and the opportunity to meet people face to face and pursue our next deals. Caution remains, however, and we will still wear masks, socially distance, and avoid larger, more crowded venues.
E-commerce is a huge new M&A focus, and we have 2 deals in the market currently that are high growth & high profit wholesale players. We are also seeing activity in the commercial and hospitality sectors, as both have been adversely affected by COVID-19 and the strong businesses there are making moves to adjust product offerings and pursue new distribution channels and end-markets in order to achieve growth.
Additional domestic upholstery opportunities, on the heels of the Braxton Culler transaction, will also be coming to market in the next several months. We anticipate these being acquired by domestic and international strategic companies who are looking to broaden their domestic upholstery footprint or balance their product offerings.
M&A will be a frontpage topic due to all-time high stock prices, the continuance of near-zero interest rates, the abundance of dry powder in PE/Family Office funds, and SPAC dollars floating around. On top of this, there is also the general angst of running a business during times of stressed supply chains, rising material costs, and impossibly bulging backlogs, as well as the risk of rising capital gains tax later in the year. There is a clear motive on both the buy and sell-side to get deals done.
Post-COVID will be an interesting time indeed. We are still unclear when this will fully, finally occur. Our international friends are in more strict lock down and cannot cross borders (Canada in particular).The WFH movement will be challenged by some employers that desires their employees back in the office sooner vs later. However, we anticipate a multi-year uptick in home furnishings consumption, increasingly via e-commerce. It will no doubt be an exciting time in our industry.
Call us and take part in this exciting M&A season!
UP NEXT AT A GLANCE
- Fast-growing E-Commerce companies (both wholesale/platform resources and DTC brands)
- Additional domestic upholstery manufacturers
- Higher-end luxury hospitality/contract brands