Capstone Headwaters Reports: Apparel, Footwear & Accessories Operators Expand E-Commerce, Direct-to-Consumer Channels as Pandemic Reshapes Retail

January 4, 2021

Boston, MA – Capstone Headwaters released its Apparel, Footwear, & Accessories Update today, reporting that companies have been forced to rapidly adapt their business models amid the COVID-19 pandemic, as state-mandated lockdowns restricted in-store sales and consumer spending retracted due to job losses and economic uncertainty.  The technology changes that were accelerated and the possibilities that were illuminated during this era will undoubtedly reshape much of the Retail industry going forward as winners and losers are assessed in the aftermath of the pandemic and their business models replicated.  This changing landscape is expected to heighten merger & acquisition (M&A) activity in 2021 as buyers seek to either invest in winning, high-growth companies or purchase strong brands that have failed to successfully pivot their business model during the pandemic.   

“We expect a surge in M&A activity next year driven by pent-up demand and excess capital that potential buyers are eager to deploy,” said Sophea Chau, Managing Director. “Companies that remained relatively stable or grew during the pandemic will be viewed favorably from a valuation perspective.” 

Jesse Betzner, Vice President, added, “While deal activity was down in 2020, companies that have successfully adapted their business models, continued to invest in their brands, and navigated the migration to e-commerce are likely to command premium valuations. However, none are likely to garner as much investor attention as digitally native brands demonstrating strong customer loyalty metrics.”  

Year-to-date (YTD), 120 transactions have been announced or closed compared to 177 over the same period in 2019.  This 32% year-over-year (YOY) decline was almost entirely due to an industry-wide M&A standstill in Q2, with many retailers reporting their steepest sales declines in April.  In Q2 alone, YOY M&A activity plummeted 79.6%.  The second half of the year, however, has shown strong promise of a recovery with Q3 activity rebounding while Q4 YTD volume has outpaced that of 2019.  


Capstone Headwaters is one of the largest and most active independent investment banking firms in the United States.  The firm has a rich, 20-year history of achieving extraordinary results for middle market entrepreneurs, business owners, investors, and creditors.  Capstone offers a fully integrated suite of corporate finance services, including M&A, debt and equity placement, corporate restructuring, valuation and fairness opinions, financial advisory, and ESOP advisory services.  Headquartered in Boston, the firm has 175+ professionals across 16 offices in the U.S., with and an international presence including over 450 professionals in 40 countries. With 16 dedicated industry groups, the firm delivers sector-specific expertise through large, cross-functional teams on a global basis.  For more information, visit

For More Information Contact the Key Report Contributors: 

Sophea Chau 
Managing Director, Apparel, Footwear, & Accessories  

Jesse Betzner 
Vice President, Apparel, Footwear, & Accessories