An article by the New York Times (NY Times) said that Versace's valuation looks as aggressive as its outfits.
The Italian fashion house believes that it is worth more than EUR1 billion (USD1.36 billion) and could triple in value in three years. Versace is sizing up buyout firms and sovereign wealth funds to finance a capital increase, NY Times said.
According to the article, a big price tag for a minority stake in the company is hard to pull off. It said that the deal structure may not suit everyone.
Versace's earnings before interest, taxes, depreciation and amortization or EBITDA is at EUR46 million last year. It is likely to be nearer EUR70 million this year, added the report.
An EUR1 billion valuation would amount to roughly 14 times its current-year EBITDA, which is a very high multiple for a business in transition, especially if an investor is buying a minority stake next to a powerful family, the article said.
The article said its latest reports suggest that the Italian state and Qatari money managers are more likely buyers than classic private equity funds.
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