Have Klaussner, Lane and Mitchell Gold soured M&A appetite for home furnishings? | Bill McLoughlin

The rumor mill has been running overtime the past six months, with first one company then another tied to an impending purchase, sale or Chapter 11 filing.

They still do those … don’t they?

The seemingly sudden and unexpected demise of first Lane, then Klaussner and Mitchell Gold & Bob Williams put a spotlight on every company that appears short on cash, long on inventory or more than an hour late paying any and every creditor.

Higher interest rates may be making consumers slower to pull the trigger on a furniture purchase, but they are making banks pull the plug much quicker when it comes to their investments. For all the talk of business conditions improving, and for some they are, there are no shortage of candidates for who will be the next “unforeseeable” closing.

At the same time, the battle for market share in a flat-to-shrinking market is becoming more intense with each passing day. Once upon a time, competitors looking to gain share could assess strategic acquisitions to outflank a competitor, gain a foothold in a new product segment or capture new customers.

Banks, private equity firms or other investors could weigh the assets and financial stability of those acquisition-seeking companies against known market conditions, comparable deals and a company’s peer set to make a reasonable assessment of the likelihood of it paying off in the next few years. In 2020, with the demand for home furnishings exploding and the demographic winds blowing in favor of household formation, money was cheap and easy to come by.

And then 2021 came, and 2022 followed.

Do you know what the appetite for home furnishings companies is right now?

I spoke recently with Howard Armistead of Mann, Armistead and Epperson (yes, that Epperson) and Stump & Company’s Bo Stump, about a fireside chat the three of us will be having at Furniture Today’s upcoming Leadership Conference.

The subject is the outlook for M&A activity. What I found is that conditions have changed dramatically over the past few years, and the types of deals that companies are looking to make and that financers are looking to support have changed.

Is it a buyer’s or a seller’s market? How are the recent deals we have all read about different from those of the past few years? From those before the pandemic? Where is the money coming from to finance these deals, and how are people getting it?

For the answer to these and myriad other questions about the unquestionably dynamic M&A market, you will have to join me at the Leadership Conference, No.28-30, at the JW Marriott Turnberry Resort in Miami.

This will be just one session in a wide-ranging agenda that will address not only the most critical issues that companies face today, but also will explore the economic, demographic and market forces that will shape the industry for years to come.

Hope to see you in Miami.

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