I find the news that Phillips-Van Heusen(NYSE: PVH), the parent company of Calvin Klein, now considers making more luxury acquisitions its first priority kind of heartening. After more than five years of being priced out of the market, so-called strategic buyers -- the luxury goods groups, and others who work in the realm -- are finally seeing valuations drop to a point where buying brands isn't just for the wildly well-financed private equity players. (I'm sure the credit crunch helps too, since private equity relies on debt.)
I've got no problem with the P.E. guys -- some of them are good friends -- but I am convinced that strategic partners offer the best opportunity for young brands. There are exceptions, of course. Jimmy Choo has done fantastically well with its private equity parents. But they already had a solid manager in place when those deals were done. For younger brands looking for leadership as well as money, I think the groups are the place to be. Just look at how Stella McCartney and Alexander McQueen were nurtured along.
It's no great secret that Hedi Slimane, the former designer of Dior Homme, is making the private equity rounds looking for backing for his own label. When Hedi left Dior it was assumed that the falling out was over ownership of his own label. I recently had a chat with someone close to the talks and was disheartened by what I learned. LVMH was offering a very large amount of cash to back a Hedi Slimane women's label. And the falling out point wasn't ownership, it was control. (You can own your own name and still not be the last word on all the decisions.)
Hedi didn't think he had enough control, so he walked. Fair enough. But now he's doing the rounds of private equity and the problem is that the people he's meeting now are bankers, not businessmen. And there's a big difference. Bankers want to get in and out quickly, with a big profit. (One told me bluntly, "We're not building businesses for our grandchildren to run."). Businessmen want to run businesses. And in Hedi's case the businessmen he'd have been working with were people he'd known for a very long time. I doubt that the bankers he meets are going to be as understanding of the types of costs that he's used to accruing while building a brand.
I think that fashion schools really owe it to their students to start offering basic classes in business. The designers who land big corporate jobs seem to lack understanding of how those structures work to enable them such freedom. Life without the corporate suits system may seem ideal -- and if you can finance your own business, it probably is. But if you've got to go hat in hand to others for money, you might be surprised what a cold hard place the world of business is.
No matter how big your name recognition, no matter how great your talent, no one worth getting money from is going to give a designer money without asking for control. I mean, would you?