Rumours have already begun to swirl about which retailers are hoping to sell up in 2013.

Rumours have already begun to swirl about which retailers are hoping to sell up in 2013, with quite a few people talking about Hobbs and Joules and – although these are just rumours at the moment – mentioning names such as Reiss, Dune, and Crew Clothing as part of these same conversations.

But the question is, where on earth will the buyers come from? After all, the consumer environment is still challenging, the availability of finance is still restricted, and a lot of businesses are keen to avoid overstretching themselves by keeping a tight hold on any healthy cash balances that still exist.

Some will look towards the private equity community as potential saviours, but I can’t believe that there will really be much interest there. For a start, several of these retailers are likely to be too ‘store heavy’ to excite most PE firms. Besides, there are just not enough points of difference between them, as they are all essentially middle-market retailers.

Of course, retailers that can offer a truly unique proposition – whether that means innovative products, specific multi-channel expertise and/or the potential for overseas expansion – may have more luck, but such opportunities tend to be the exception, rather than the rule.

Valuations will ultimately have a key role to play, since private equity buyers looking for a ‘bargain’ will often be interested in a business that’s in distress.

In cases like this, as long as the business is valued low enough, then why wouldn’t a PE firm buy it? However, a rock-bottom valuation is unlikely to be attractive to most sellers – and so both sides may quickly find themselves facing something of an impasse.

So, apart from PE firms, what other options will retailers have? The most obvious route is trade, but it’s difficult to say who the natural consolidator would be in this market, especially as most businesses already have their own problems to deal with.

Perhaps there is room for another Pentland, where a corporate essentially plays the role of a PE house and creates a group that can leverage infrastructure, and thus add value to the corporate creating the group as well as the company that’s on the receiving end of the investment.

Pentland Group has defied the high street gloom to report a 17.3% rise in sales to £1.5bn in 2011, fuelled by a strong performance in international markets.

As the parent company of Pentland Brands, the UK’s biggest brand supply house, Pentland has become one of the leading brand management companies trading in the sports, outdoor and fashion sectors, and the owner of high profile brands including Speedo, Berghaus and Boxfresh.

For such companies, M&A activity still has the ability to fulfil certain strategic objectives, such as adding a new brand to an existing portfolio, for example.

In other cases, M&A can help a group to move into a new geographic region more easily, and/or to acquire new technologies or sales channels. These are all enviable goals, but given the current state of the economy, who has the drive, resources and vision to deliver on these promises?

Perhaps that raises the most important question of all: are there any companies out there capable of filling this role?

Feel free to tweet me @coen_dan with any suggestions, as I’m genuinely curious – and imagine that some rather well known retailers will be, as well.

  • Dan Coen, Director, Zolfo Cooper