Questions Raised by HBC / Saks Global Acquisition of Neiman Marcus Group

In the last week, Saks PE-backed owner HBC decided to acquire the assets of Neiman Marcus Group for $2.65B. This is a rollup strategy if I ever saw one.

If HBC is true to its strategy, the next step is to divest Neiman Marcus real estate assets (hello Macy's) in a similar way to Saks 2021 split into Saks (dot) com and Stores business units, with one servicing the other.

While we are in a period of consumer market share consolidation into bigger players, that doesn't mean these large vertically-integrated behemoths are operating them. Actually, we appear to be in an extended period of licensing and financial engineering brought about by the success of business models like ABG and WHP Global that separate brand, eCommerce, and operator into separate operating companies.

This raises a few questions, I thought I would pose here:

* What is the significance of Amazon and Salesforce in the deal?

I wouldn't read too much into this, but I do have a few interesting theories.

I expect that the new company Saks Global will be a big customer of both AWS and Salesforce. Neiman Marcus as far as I know is a custom website. Saks is a big SFCC customer. It's possible that optionality into Amazon Logistics is built into this deal.

Everyone wants to read Amazon going back into retail into this deal and I simply do not. Amazon's retail forays have been mostly failures. The retail component is not even controlled by Saks Global - which is just the former eCommerce arm.

If I ever see an Amazon Fashion "Shop in Shop" in a Neimans or Saks it will be a huge surprise to me -- although Amazon doesn't mind experimenting, I can't imagine this would be good for the Saks brand.

On the other hand, Amazon eCommerce might weasel its way into getting Neimans and Saks onto Amazon Fashion.

In the eCommerce platform wars: The industry saw what just happened at Overstock. On the eCommerce front, Salesforce is keen to keep a long-term customer (it's exceedingly difficult to get deals this size back) and grow share of wallet of new products like the new Salesforce Data Studio, etc.

* Does this signal that private equity-backed exits are returning to 2021 levels?

After a serious climb in 2021, private equity exits fell off a cliff in 2022, and 2023 was flat to those levels. The industry would be happy with a 2024 that is somewhere in the middle I'm sure.

With IPO levels still not recovering (yet), private equity could still be the savior that investors need.