DealTalk in NYC at the Luxury Law Summit


By Agnes Foy

14 November 2018 at 09:45 BST


Increased M&A activity in the luxury industry is Elnaz Zarrini's confident prediction

Elnaz Zarrini certainly knows how to DealTalk. She advises luxury companies on mergers and acquisitions, equity investments, license agreements and joint ventures. Elnaz Zarrini is an associate in the Corporate Department in Morrison & Foerster’s New York Office. She’s adept at advising companies in a wide range of industries. Consumer brands, fashion, real estate, and the luxury markets are what she knows - and cares - about. 

DealTalk: M&A meets Luxury

Elnaz Zarrini has thoughts and experiences in abundance about the M&A strategies that will enable luxury fashion houses and private equity firms to stay ahead of the curve. Her front line exposure to the commercial and legal issues that the fashion industry daily contends with is impressive. Today Ms Zarrini will be chairing the Luxury Law Summit session ‘DealTalk: M&A Meets Luxury’. Her mission is to both illuminate and ignite. Her panelists are Grace Fu, Rick Perkel, Tracy Bacigalupo and Jeffrey Hellman. Perspective sharing on fashion deal timelines - from due diligence to post closing integration - is the collective goal.  Ms Zarrini will, no doubt, zestfully tease out the ‘how’, ‘when’ and ‘why’ factors.

Most important of all

Ms Zarrini believes social media is the one single factor that is going to provide increased opportunities for the luxury sector over the next five years. In her view a “strong and modern luxury digital marketing strategy is essential if brands want to continue to engage with the new generation of affluent consumers.” Will all of her panellists agree? Only time will tell. In advance of the Luxury Law Summit, she shares a few of her industry perspectives.

Three key fashion industry challenges?

On the very top of Ms Zarrini’s ‘top three’ list is the challenge luxury brands face in making optimum use of social media without compromising the core values of the luxury brand.  Second on her list is e-commerce. She knows the stats: “E-commerce for the retail industry is projected to occupy a 25% market share by 2025.”  She predicts this shift will force luxury labels to adapt their marketing strategies and reduce brick-and-mortar stores. In her view luxury brands will need to do this not only to cut costs but also to maintain the perception of brand exclusivity. Last, but not least, she predicts luxury brands will have to increasingly deal with waning brand loyalty, due to the ever-increasing choices consumers now have.

M&A trends?

Increased M&A activity in the luxury industry is Ms Zarrini’s confident prediction. “Luxury brand consolidation is at an all-time high. The race to build a global fashion luxury group, which has been dominated by European conglomerates like LVMH and Kering, has spread to American soil.” She cites the wish to counterbalance any brand-name dilution as being a strong motivation to consolidate. Ms Zarrini gives, as examples, Michael Kors’ acquisition of Versace and Tapestry’s acquisition of Kate Spade and Stuart Weitzman. Their various voyages demonstrate well what luxury labels can experience in their attempts to expand their affordable luxury brand, diversity luxury goods holdings and expand their e-commerce presence.

Common legal challenges?

The luxury fashion industry is behind the game on cyber security, so this issue is a common legal challenge. But Ms Zarrini also raises additional challenges - from both the designer’s perspective and the investor’s perspective. “From the investor’s vantage point, there are risks that the designer behind the eponymous brand may go off-brand, especially since the investor cannot control the designer and legally, cannot demand that the designer continue to work for the namesake brand.  For example, John Galliano’s anti-Jewish tirade wreaked havoc on his own brand.” She thoughtfully registers the attendant pain that designers can experience. “Those designers who have lost control of their namesake brands are all too familiar with the pain of parting with not only their name, but their experience with the brand and the history of the brand.” Ms Zarrini cites as examples Joseph Abboud, Jimmy Choo, Hervé Léger, and Jil Sander.  She understands the pain.

Other Luxury Law Summit ‘hot’ topics?

When asked what other session at the Luxury Law Summit she was most looking forward to joining, Ms Zarrini’s response was swift and enthusiastic. Her answer: “I’m very much looking forward to the Off-White panel. It’s one of my favourite brands!”

 
   
 
 
 

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