Carlyle’s approx. $1bn Acquisition of END

By Mikail Boudouda and Hippolyte Meuleau (Grenoble École de Management), Justin Leung and Harson Lin (Hong Kong University of Science and Technology)

Overview of the deal


Acquirer: The Carlyle Group

Target: END (Ashworth and Parker Ltd.)

Implied Equity Value: $1bn, according to Bloomberg’s estimate

Closed date: 04/01/2021

Acquirer advisor: Morgan Stanley, RBC, and Latham & Watkins

Target advisor: Goldman Sachs and Womble Bond Dickinson


On 23 March, The Carlyle Group announced that it was acquiring a major stake in the luxury, streetwear, and sportswear retailer END founded in 2005. After Supreme in 2017 (for a $500 million deal), the Carlyle Group continues to expand its experience and influence in the luxury and streetwear industries. Since 2005, END has come a long way and has built a powerful online business with an international reach. The company now employs over 650 people and ships to over 100 countries. END has built a reputation for providing a high-quality consumer experience, not least through a careful selection of its products. With over $246 billion in assets under management, the Carlyle Group maintains its strategy of thoughtful investment. The transaction will be funded by Carlyle Europe Partners and an affiliate of Carlyle Asia Partners.


“We are thrilled to welcome Carlyle as our new partner. Their experience and strong track record in Luxury and Streetwear will be invaluable to us in supporting END’s long-term and sustainable growth strategy.” - Christiaan Ashworth & John Parker, Co-Founders, and Co-CEOs

Company Details: (Acquirer - The Carlyle Group)


The Carlyle Group is an asset management company founded in 1087 and specialising in private equity. Headquartered in Washington, D.C., the group invests in a wide range of businesses. The Carlyle Group has already invested over $20 billion in the consumer sector.


Founded in 1987, headquartered in Washington, D.C., USA

CEO: Kewsong Lee

Number of employees: 1825

Market Cap: $13,259.5 million (as of 04/01/2021)

EV: $20,360 million

LTM Revenue: $2,934.6 million

LTM EBITDA: $873.8 million

LTM EV/Revenue: 6.93x

LTM EV/EBITDA: 23.3x


Company Details: (Target - END)


END is a retailer that works with over 500 designers and brands. The company's activities are divided between shops, mobile applications, and an online platform that has given it an international dimension and contributed greatly to its success. The company is mainly known for its trade in sneakers and luxury clothing.


Founded in 2005, headquartered in Newcastle upon Tyne, United Kingdom

CEO: John Parker & Christiaan Ashworth

Number of employees: 650

Market Cap: Not listed

EV: $1B according to Bloomberg’s estimate

LTM Revenue: $235 million

LTM EBITDA: N/A

LTM EV/Revenue: 4,25x taking Bloomberg’s estimate as LTM EV

LTM EV/EBITDA: N/A


Projections and Assumptions

Short-term consequences


Short-term wise, Carlyle Group can benefit from END’s unique omni-channel offering, including online platforms, mobile apps, and physical stores, as well as its loyal customer base. By collaborating with luxury brands within its current portfolio, like Hunkemoller, products can be bundled and sold through END’s extensive network covering not only the UK but 100 countries that END ships to. Given Carlyle’s not too extensive network in luxury brand retailing, END’s onboarding aids Carlyle to consolidate before facing even stronger competitions from other luxury brand conglomerates, such as LVMH, Agnelli Family, etc. Sales would also be boosted with bundling and cross-selling, achieving further revenue synergy in the short run. As it is predicted that the post-COVID period would be tough for retail and luxury brands, as consumption is not necessary, a merger for consolidation is said to be critical for the profitability of both END and brands under Carlyle, especially with END further digitalizing the sales of luxury brands under Carlyle.

As for the cost-side synergy, END’s entry to the Carlyle’s Group offers a chance for an amalgam between the supply chains of END and Hunkemoller. With both companies headquartered in Europe and both having a strong need for shipping internationally, the integration aids in a reduction in delivery and warehousing costs. Brick and mortar stores with lower demand can even be combined for better cost-efficiency. END’s sizable network of connections with partners in the luxury retail segment aids portfolio companies of Carlyle to benefit from economies of scale to a greater extent.


Long-term Upsides


The acquisition benefits END in both product diversification and market expansion in the long term. Currently, END focuses on luxury fashion items for men. Having strong relationships with famous brands including Givenchy, Kenzo, and Valentino, gives a competitive edge for END to expand its product range to new market segments - women's wear. Looking back to the previous track record of the Carlyle Group, they made a lot of successful investments in mid-to-high-end fashion brands, such as Golden Goose and Hunkemoller. These acquisitions can provide expertise in management and development strategies for END Combining with the online and offline flagship stores retail model, it further benefits END in its product design and ranges since the company can leverage online searching data to understand customer preference and provide a new shopping experience to increase their stickiness through the offline model.

The Carlyle Group is also eyeing international expansion opportunities for END For the fiscal year ended March 2020, END generated total revenue of £170 million, yet only 65% of which were from outside the UK compared to its shipment to over 100 countries. Such underpenetrated overseas markets imply further room for growth after The Carlyle Group takes over. The fact that the acquisition would be partially funded by Carlyle Asia Partners V, a US$6.6bn fund focused on buyout and strategic investments across a range of sectors in the Asia Pacific region, also means that Asia, or specifically China, could be the main focus of such expansion strategies – a rational move as according to Bain & Co.’s estimates, China would contribute to half of all luxury spending worldwide by 2025.


Risks and Uncertainties


While END's predictions and growth potential are very reassuring, the launch into womenswear will be a real challenge. While the company has been able to differentiate itself by perfectly capturing the desires of its customers, the way women shop for fashion is very different from the way men do. However, END was built to appeal to a male customer base. The challenge will be to successfully replicate the formula for women.


As we see this deal evolving and being conducted, one question remains: Does Carlyle Group possess the required resources to sustain END’s strategy over the long run? Carlyle Group is a very diversified global investment firm that is not very present in the retail industry at the moment. The only retail brand part of the group is Canada Goose which is a brand that has a completely different strategy and drastically different operations than END that is a multi-brand retailer. Also, About a year ago we saw how the group cashed out from Supreme by selling its shares to VF Corp. This brings another uncertainty to the ability of the Group to handle global retail businesses.


Hopefully, the vision Carlyle will give to the company will be profitable on both ends and will allow END to grow substantially in the near future.


“We are attracted to END’s distinctive style, which mixes luxury and contemporary brands with the best in sneakers and sportswear. We are excited by the many growth opportunities that lie ahead for the company, including the launch of womenswear as well as further international expansion.” - Massimiliano Caraffa, Managing Director leading Consumer & Retail for the Carlyle Europe Partners advisory team
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