The fashion deal market was like a game of musical chairs.

From Warby Parker to Allbirds to Rent the Runway, last year’s surge in large consumer IPOs has seen private brands looking to connect with buyers and profit.

But the music has stopped for now, and sellers still far outnumber buyers.

WWD released news earlier this month that Proenza Schouler, Khaite and ALC have all tested the market or are still under investigation. Bloomberg reports that Outdoor Voices is also considering a sale. The company did not immediately return inquiries on Monday.

It is said that Ganny, Isabel Marant, etc. are also on the market.Tom Ford appears to have done so through reported talks with the brand’s beauty licensee Estee Lauder, Inc. Ford is said to be looking for a deal that would value the company at around $3 billion.

But being a successful brand in the apparel industry is not enough. Sellers must find suitable buyers.

Veronica Beard, for example, is said to have mildly tested the buyout market earlier this year, but eventually backed out, finding no buyers willing and ready to pay for brands of growing size. I understand.

Sources say the company continues to grow and is keeping an eye on the upcoming IPO market and waiting for it.

A rep for Veronica Beard declined to comment, but it positions the brand as part of the next wave of fashion IPOs whenever Wall Street tries to rethink the industry. Some are waiting to be published.

But companies that aren’t ready for Krieg Wright on Wall Street are in a tough spot. You have to prove yourself to a small number of potential buyers in uncertain times.

David Munczinski, principal of investor Firelight Capital Partners, said: “We have deals closing before the end of the year, but valuations are [earnings before interest, taxes, depreciation and amortization] It reflects the uncertainty of where 2023 will go.

“What you’re seeing right now is the widespread recognition of COVID-19 sales among investors, especially in the direct-to-consumer space.[-19] — online sales, marketplace sales, wholesale sales that take place online — are unsustainable,” Munczinski said. “There really was COVID[-19] bump. “

This is important because acquisitions and buyouts are priced based on multiples of earnings and sometimes sales.

But the market sees last year’s business as an exception to the pandemic, with no strong foundations to base prices on.

Munczinski said the trading moratorium will now last through the third quarter as buyers and sellers grapple with valuations.

In more normal economic conditions, prices could be based on estimates of next year’s earnings — next year 2023 with the threat of a looming recession, ongoing war in Europe and a spike in inflation. If it wasn’t a big question mark — high and the world is still waking up from the pandemic.

Munczinski said of the deal market, “Let’s assume the recession continues. Things will stay like this.” “Let’s assume there’s no recession. Inventory situations have to be worked out, both at retailers and at the current brands. It’s the inventory situation that leads to the problem and will be the next area for investors to scrutinize.”

In addition to that, there is another key factor restraining the buying and selling of fashion companies, including last year’s extraordinary sales, this year’s economic woes, and uncertainty over the next year. Who can grab the cash and take a chance on a small to medium sized fashion business?

Years ago there were big strategic players like Liz Claiborne Inc. and Jones Apparel Group looking for apparel businesses to build, but they disappeared. Witness VF Corp. still making acquisitions, buying Supreme for her $2.1 billion in 2020. PVH Corporation, under Chief Executive Officer Stefan Larson, appears to be focusing on strengthening the Tommy Hilfiger and Calvin Klein brands. Capri Holdings Chief Executive John Idle is considering acquisitions, but he is focusing on luxury goods, especially European companies with at least $500 billion in sales and the potential to grow to $1 billion. ing.

Also, many of the fashion savvy private equity players who make a lot of money buying and selling apparel businesses are keenly aware of the lack of ready-to-buy buyers and are therefore reluctant to invest in this space. There is none.

On top of that, building successfully in an industry that relies on such a short-term customer base remains challenging.

“In the current environment, it is becoming increasingly difficult to attract quality buyers for small and medium-sized fashion brands, especially if they are not demonstrating growth, solid profits and strong consumer ties. .” Vendome Global Partners. “Today’s consumers are rapidly evolving and fickle, so many financial buyers recognize that owning a fashion company can be financially difficult.”

This is the environment that separates winners and losers. Those who are looking to rake in more cash and those who are actually looking to cash in.

William Susman, Managing Director of Threadstone Advisors, said: -Class companies can complete transactions. ”