Growth Through Acquisitions: The Case of Fashion Industry

Abstract

Moving by the facts happened in the Italian and international fashion system during the last years, the article outlines the various growth paths of the different companies involved and carries out the effects generated by external growth on company profitability and on the strength of the brands. The aim of the analysis was to highlight the main issues emerging at industry level in order to verify if external growth generates a tangible increase in value for shareholders. Through the analysis of specific cases from the fashion industry, the effect of acquisitions on stock performance of the companies involved has been calculated. Results show a significant correlation between strategic and financial benefits related to the operations. The effect of successful acquisitions has been a substantial improvement in the financial performance of the stocks in terms of a bigger weight of the Firm-Specific factor inside the return.

Keywords: firm's valuation and M&A operations, finance in fashion companies

JEL Classification: G34, L67