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Small and midsized businesses in the U.S. are increasingly looking to tie-up with private equity.

Why it matters: Many private businesses — especially family-run ones — want to turn a page without courting a corporate takeover, Kimberly writes.

What they're saying: There's lots of generational change happening at small and midsized businesses, says Don McCree, vice chair and head of commercial banking at Citizens Financial Group.

The pandemic may have disrupted those timelines, but now is when "they're feeling good about their businesses, and they feel like they've weathered the storm," McCree tells Axios.

"People that want to transact are beginning to transact in some significant scale," he says, adding a logical place for these companies may be private equity.

Between the lines: Some management teams want to stay involved and may be concerned about a strategic merger, McCree says.

Private equity can offer more creative terms, and the right operating partner could do multiple acquisitions that could expand their business and leave their ownership position worth more.

"The whole private equity game has changed from one of financial engineering to [adding] a lot of operational value," McCree says.

By the numbers: About three-quarters of U.S. SMBs surveyed say they're looking at private equity as "a source of current or future partnership and funding," according to a Citizens report.

More than 530 SMB leaders in the U.S. participated in the survey.

Meanwhile, about 46% of PE firms expect higher deal volumes this year, compared with 19% expecting volume to decline, according to Citizens' Global M&A report in January.

Around 80% of PE firms plan to buy more than they did last year while just over 20% expect to sell more.

1 big thing: Small and midsized companies courting PE

an illustration of two people shaking hands while holding a paper shopping bag

At World Retail Congress in Paris, climate change and AI dominated discussions, Richard writes.

Why it matters: Consumer-facing companies are facing unprecedented challenges this year, from rising costs to election outcomes that could impact trade.

What they're saying: Retailers not adapting to the challenges of climate change will only increase their cost of doing business, Carrefour CEO Alexandre Bompard said.

It's about "more than just reducing our climate emissions," he added.

"It's about how climate change directly impacts our businesses. From the rising costs of commodities like olive oil and cocoa to the volatility of energy prices, climate change is making resources more scarce, more expensive," he said.

Zoom in: Carrefour has been in turnaround mode under Bompard since he came aboard in 2017.

Carrefour's hypermarkets were on the verge of extinction when he took the wheel, the CEO says.

A restructuring and a focus on omni0channel, among other moves, have revived the retailer, he says.

Artificial intelligence also emerged as a key topic on the main stage and in conversations.

Mark Ibbotson, the former EVP of Central Ops at Walmart U.S., touted AI to attendees as the best way to combine technology and people.

Kingfisher CEO Thierry Garnier said on the main stage that successful deployment of AI means focusing on a handful of areas where it can immediately drive efficiencies, which in his company's case meant management of markdowns and clearance.

Inside the room: Impact Analytics' CEO Prashant Agrawal told Axios that his AI startup, for example, is helping retailers to better forecast demand to order the right type and amount of inventory.

Lily AI president Ahmed Naiem talked with Axios about how his company — which had a post-money valuation of $205 million tied to its last round — is helping improve search both on retailers' sites and on Google.

The intrigue: The death of the mall hasn't hit the Middle East, where they serve as air-conditioned escapes from the heat and community centers, Majid Al Futtaim Lifestyle CEO Fahed Ghanim told Axios.

The division, part of retail conglomerate Majid Al Futtaim, operates more than 70 stores and 22 e-commerce platforms in six markets in the Middle East, with exclusive licenses for brands such as Lululemon and Lego, and generates north of $270 million in revenue.

What we're watching: Ghanim forecasts IPOs by retail-related businesses based in the Middle East, though he declined to comment on if a public offering was in the cards for his parent company.

Stay tuned for more coverage from the World Retail Congress, including on how Kmart turned itself around in Australia (sadly, the chain stopped offering the Bluelight Special).

2. World Retail Congress tackles climate change and  AI

lllustration of the earth with a continent in the shape of a dollar sign

Monday, April 15: Sparkling water brand Waterloo is weighing how to scale its business, facility management platform Ecotrak raised $30 million and we compiled a list of the major bankruptcies. Read the newsletter.

Family-owned companies see allure in take-private deals

FTC said to consider blocking Tapestry's takeover of Capri Holdings

Walmart-backed Ibotta raises $577M in IPO

PPVP aims to seed early-stage commerce tech companies

Saudi project worth $63B seeks North American retail partners, investors

Nordstrom family mulls taking the company private

Ibotta's stock debut nets 150+ Denver millionaires

3. Catch up quick

Want more retail deals? Go deeper into our full database in the Axios Pro Deals Tracker.

• Maven Ventures, an San Francisco-based consumer seed-stage venture firm, raised $60m for its fourth fund. mavenventures.com

• Flink, a German-based ultra-fast delivery company, raised €100m ($106m) from existing investors including Rewe Group, Bond, Northzone and Cherry Ventures, and is in potential acquisition discussions, per Bloomberg. axios.link/3UbMvyy

• Uni Express, a Canadian-based delivery startup for e-commerce, raised $50m in Series C funding led by DCM. axios.link/3xHmyPO

• Bcomp, a Swiss supplier of flax-based textiles to BMW and Volvo, raised a $40m Series C round led by EGS Beteiligungen, with Verve Ventures, Zürcher Kantonalbank, RKKVC, Generali, Airbus Ventures, BMW i Ventures, Porsche Ventures and Volvo Cars Tech Fund also participating. axios.link/3JgNatr

• ClickPost, an Indian logistics intelligence platform, raised $5m in Series A funding led by Inflexor Ventures and Athera Venture Partners. axios.link/3JGDCrX

• The Folklore, a New York-based B2B fashion marketplace, raised $3.4m in seed funding led by Benchstrength, with Slauson & Co, Techstars, and Black Tech Nation Ventures also participating. axios.link/3xOvx1l

• Wind Point Partners sold Handgards, an El Paso, Texas, manufacturer and supplier of disposable food safety products for the food service industry, to Wynnchurch Capital. handgards.com

• Forward Consumer Partners acquired Firehook Bakery, a Chantilly, Virginia-based artisan baking business. mediterraneancrackers.com

• Red Lobster is considering filing for bankruptcy to restructure its debt and shed leases. It is working law firm King & Spalding, per Bloomberg. https://axios.link/3Jo9pOb

• TGI Friday's will go public via a merger valued at $220m with its U.K. franchisee Hostmore, per CNBC. https://axios.link/49NTraC

🚑 23andMe CEO Anne Wojcicki seeks to take the Sunnyvale, California-based DNA-testing company private, per an SEC filing. axios.link/3JoCQiR

4. Retail transactions

• Verlinvest hired Sebastien Katch as managing director in operations. He was previously COO at RealTruck. verlinvest.com

• Tchernavia Rocker will leave Under Armour after serving as chief people and administrative officer, effective June 1. axios.link/3U1BiAf 

• Julia Goddard, formerly with Alexander McQueen, was named CEO of Harvey Nichols. axios.link/3Q5Wrbo 

• Victoria Dolan, former CFO of Revlon, was appointed to Instacart's (Nasdaq: CART) board of directors. axios.link/3TXPaf3

• Mike DeSimone was named CEO of omnichannel cloud platform NewStore, succeeding founder Stephan Schambach who will remain chairman of the board. axios.link/4aV0U8J

• Michael Natale, previously VP global flavor, multinational accounts and customer experience for Ingredion, was named president of Edlong. axios.link/4aC5dpN

• Alexandre Arnault and Frederic Arnault will join older siblings Delphine Arnault and Antoine Arnault on LVMH's board, tightening the family's hold on the luxury conglomerate. https://axios.link/4aFRGO9

• Kenny Wilson is stepping down as CEO of troubled footwear maker Dr. Martens and will be replaced by chief brand officer Ije Nwokorie, who will become CEO before the end of the financial year. https://axios.link/3w9XG2q

• Terence Reilly has been named by Crocs as president of its Heydude footwear brand, making a return to a company where he once served as CMO.  https://axios.link/3W2rCbl

• Collen Keating will be fitness chain Planet Fitness' new CEO effective June 10, replacing interim CEO Craig Benson, per CNBC. https://axios.link/49NNESq

• Nick Beighton is out as CEO of troubled online retailer Matchesfashion, which had been placed in receivership in the U.K. by owner Frasers Group, per WWD. https://axios.link/4d5SGwm

5. It's Personnel

👀 Situational awareness: Former delivery startup darling Getir, once valued at $12 billion, is reportedly weighing asset sales and potential exits from non-core markets.

🍽️ What we're eating: Richard recommends a neighborhood brasserie in Paris called L'Oustal, where he had cheesy mashed potatoes and a beef fillet with blue cheese sauce, with a glass of Brouilly Beaujolais. Other treats included the profiterole at La Maison de l'Aubrac and the tarte tatin at Le Cafe de Paris.

✏️ Many thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece for today's edits.

🙏 Thank you for reading Retail Deals. See you again next week.

April 19, 2024

1 big thing: Small and midsized companies courting PE