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Joe Anto

E: janto@pcecompanies.com

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Industry Trends

Increased Consumer Spending, Despite Descreased Discretionary Spending

Consumer spending increased by 0.4% in August after falling 0.2% the month before. Services increased by 0.8%, with housing and utilities, transportation, and healthcare sustaining the highest growth. Spending on goods dropped 0.5%, driven mainly by a 42% drop in gas spending and rising interest rates slowing demand for home goods. Recreational goods and services spending fell as high inflation drove consumers to pull back on discretionary spending.1

U.S. Retail Vacancy Reaches Lowest Level in 15 Years

Despite increasing rents and recession fears, U.S. retail vacancy fell to a 15-year low of 6.1% as online retailers and companies who survived the pandemic seek to accelerate growth, according to a report from real-estate services firm Cushman & Wakefield. With sales growth in physical brick-and-mortar stores outpacing e-commerce this year, per Brookfield Asset Management, companies are turning to physical stores to attract customers, build brand awareness, and boost growth.2

Consumer Sentiment on the Rebound in Q3

The consumer confidence index, which measures consumers’ attitudes, buyer intentions, and consumer expectations for inflation, stock prices, and interest rates, rose for the second consecutive month in September to 108.0 from 103.6 the month prior. The increase, driven by a growing job market, increasing wages, and declining gas prices, follows declines from April through July. Inflation and interest hikes are expected to constrain short-term growth ahead.3

Consumers Increasingly Turning to “Buy Now, Pay Later” Services for Groceries

With many consumers tightening their wallets due to soaring inflation, more Americans are turning to “Buy Now, Pay Later” services to purchase groceries. Pay-later companies, like Zilch and Affirm, allow customers to purchase goods with short-term debt, similar to credit cards, without an extensive credit check. The rapid adoption, primarily driven by younger consumers, has raised concerns of consumers overextending themselves, with the U.S. Consumer Financial Protection Bureau calling for more regulation.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Radisson Hospitality, Inc.
  • Choice Hotels International, Inc.
  • $673.16
  • Blue Nile, Inc.
  • Sterling Jewelers Inc.
  • $398.20
  • BBQ Holdings, Inc.
  • MTY Franchising USA, Inc.
  • $325.73
  • Hyatt Regency La Jolla at Aventine
  • IQHQ, Inc.
  • $216.30
  • Auto Glass Company Of Memphis, Inc.
  • Driven Brands Holdings Inc. 
  • $170.64
  • Foss Floors
  • Mohawk Industries, Inc.
  • $148.00
  • Tropicana Las Vegas Hotel and Casino, Inc.
  • Bally's Corporation 
  • $148.00
  • Mandarin Oriental (Washington, DC), Inc.
  • Henderson Park Capital Management
  • $139.00
  • 541-room Hotel Irvine
  • Hyatt Hotels Corporation
  • $135.00
  • Loews Boston Hotel Corporation
  • Electra America Hospitality Group
  • $116.65

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Magneto & Diesel Injector Service, Inc.
  • Gridiron Capital, LLC
  • n/a
  • Bandon Holdings LLC
  • Sentinel Capital Partners, L.L.C.
  • n/a
  • Family Entertainment Group, LLC
  • H.I.G. Capital, LLC
  • n/a
  • El Car Wash, LLC
  • Warburg Pincus LLC
  • n/a
  • BBB Industries, LLC
  • Clearlake Capital Group, L.P.
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Certain Assets of Enjoy Technology, Inc.
  • Asurion, LLC
  • $110.00
  • Certain Assets and Liabilities of Keke's Breakfast Cafe and Eight Keke's Restaurants
  • Denny's Corporation
  • $82.50
  • Ellis Entertainment, LLC
  • Churchill Downs Incorporated
  • $79.00
  • Broad Arrow Group, Inc.
  • Hagerty, Inc.
  • $64.80
  • Bollinger Motors, Inc.
  • Mullen Automotive, Inc.
  • $57.17

 

Source S&P Capital IQ as of 10/13/2022 and PCE Proprietary Data

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Joe Anto

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. Mutikani, Lucia. "U.S. consumer spending rebounds, but high inflation cooling demand." Reuters, 30 September 2022.
  2. King, Kate. "Retail Real Estate Is Enjoying Its Biggest Revival in Years." The Wall Street Journal, 4 October 2022.
  3. "US Consumer Confidence." The Conference Board, 27 September 2022.
  4. Krishna, Priya, "Eat Now, Pay Later: Going Into Debt for Food." The New York Times, 7 September 2022.
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