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The former owner of Belstaff has died in a motor scooter accident at age 42.

MILAN — Michele Malenotti, a former creative director of Belstaff and managing director of Matchless London, has died in a motor scooter accident at age 42.

According to press and police reports, Malenotti was returning home at 3 a.m. on Saturday after a game of padel with friends when he lost control of the vehicle in a roundabout between Venice and Treviso.

Motorcycles were his lifelong passion, inherited from his father Franco Malenotti, the chairman of Matchless London, the heritage British motorcycle and clothing brand. The Malenotti family bought the storied brand, which includes classic motorcycle jackets such as the “Osborne,” the “Notting Hill” and the “Kensington,” worn by the likes of Gerard Butler, Daniel Craig, Samuel L. Jackson, Harrison Ford, Kate Moss, Scarlett Johansson and Cara Delevingne.

Before Matchless London, the Malenotti family owned outerwear specialist Belstaff, known for its waxed cotton biker garb, which was sold in 2011 to Labelux Group in a $161 million transaction. Previously, Belstaff was part of the Malenotti family-owned Clothing Company. In 2007, Clothing Company, which at the time also controlled the Capalbio and Black Prince brands and reported sales of around $120 million, was eyeing an initial public offering, which fizzled with the 2008 global financial crisis.

Michele Malenotti and his brother Manuele developed solid ties with Hollywood for Belstaff.

Over the years, the brand’s jackets have appeared in around 100 movies including, most famously, in “Mission Impossible,” worn by Tom Cruise’s Ethan Hunt, “Real Steel,” “Twilight,” “X-Men: First Class,” “The Girl With the Dragon Tattoo” and “War Horse.”

Similarly, in 2017, Matchless London teamed with Arnold Schwarzenegger on a limited-edition collection of three menswear staples, all made in Italy, following a collaboration with the actor on “The Terminator.”

In 2015, confessing he was a fan of “Star Wars,” Malenotti spearheaded a Matchless London capsule collection offering items based on the popular sci-fi film series.

Miramax used a number of Belstaff styles for 2004’s “The Aviator,” starring Leonardo DiCaprio.

Former Gucci creative director Alessandro Michele is said to be negotiating a contract with the Rome-based couture house.

MILAN — It may be a cliché, but the show must go on. The fashion industry is still digesting the news of Pierpaolo Piccioli’s sudden departure from Valentino after 25 years, but the rumor mill is already in overdrive as to who will succeed him.

On Friday, WWD was the first to report that Piccioli was exiting the Rome-based couture house based on information from market sources, who also believe that former Gucci creative director Alessandro Michele will succeed him and is thick in talks and negotiating a contract with Valentino.

Michele could not be reached for comment.

According to sources, Rachid Mohamed Rachid, chief executive officer of Valentino parent Mayhoola, last year wished for Michele to become creative director of Walter Albini but the deal did not materialize as the proposal included an investment in the project, which the designer declined. Last May, Bidayat revealed it had acquired the intellectual property and a substantial part of the archives of Albini, with the goal of reviving the brand. Bidayat is controlled by Alsara Investment Group, which was founded by Rachid.

“This time around, the Valentino project would be much more interesting for Michele, as it would also allow him to design couture collections, and it is no secret that he needs a well-oiled machine behind him to support his research and creativity, with skilled designers and artisans, the best fabrics and big pockets to turn his ideas into reality,” said another source. “Also, Valentino is not as huge in terms of sales as Gucci, so the pressure is different, and, on the contrary, there is strong growth potential.” For context, as per the latest figures available, Valentino’s sales in 2022 reached 1.42 billion euros, up 15 percent from 2021. Gucci’s sales last year were 10.5 billion euros.

One source pointed out that Valentino’s CEO Jacopo Venturini and Michele aren’t strangers, as they met when the former was executive vice president, merchandising and global markets at Gucci. “They worked well together, of course they may have had some disagreements — creativity versus business demands — but it was a good relationship.” Venturini was named CEO of Valentino in May 2020.

Michele’s non-compete is said expire this month and Valentino needs a designer pronto to avoid sitting out too many seasons. After all, the story goes that Michele’s first collection for Gucci under the lead of then-chairman and CEO Marco Bizzarri in 2015 was assembled in only a few days, following the sudden exit of his predecessor Frida Giannini a week earlier. Additionally, Michele is said to be determined to continue to live in Rome and has recently been restoring his new home in a medieval building in the city, Palazzo Scapucci.

Valentino said Friday that Piccioli’s successor would be named soon, which points to some speed in the process. The designer has already exited the company, making his fall 2024 all-black collection shown during Paris Fashion Week his swansong for the brand.

Sources are also speculating about the future of Piccioli, saying he could be next in line at Balenciaga to succeed Demna, or at Givenchy, now designed by a team after the exit of Matthew M. Williams. At the same time, Maria Grazia Chiuri, Dior’s artistic director of women’s haute couture, ready-to-wear and accessories collections, could also be eyeing a return to Rome, either at Valentino or at Fendi, sources believe.

No matter — despite all the white noise, Piccioli’s departure was met with surprise and sadness.

On his official Instagram page, Valentino Garavani thanked Piccioli “first and foremost” for his “friendship, respect and support.” He continued by saying: “You’re the only designer I know who hasn’t tried to distort the codes of a major brand by imposing new ones and the megalomania of a ridiculous ego.”

He recalled how when he retired he said he wanted to leave the party while it’s still full of people. “And the same happens for you PP, the party is full of people and everyone applauds you. Thank you Amico!”

“What an extraordinary Valentino you have made. What a gift to everyone there, and to all of us,” wrote Marc Jacobs.

“Grande Pierpaolo,” spelled out in all caps by Donatella Versace. “You made magic you brought elegance, fantasy and drama. You honored a master while continuing to nurture your own Voice and ignited the next generation of customers.”

“Sending love and respect,” posted Zac Posen.

The list goes on, with fond messages from everyone from Silvia Venturini Fendi to Sabato De Sarno, who worked with Piccioli from 2009, eventually becoming fashion director overseeing men’s and women’s collections before being promoted to creative director of Gucci last year.

Piccioli “will be sorely missed: his vision of beauty, his sense of color and materials, his aristocratic perception of fashion will remain indelible pages in the history of fashion,” said with some sadness Alessandro Maria Ferreri, founder and CEO of luxury consultancy The Style Gate, praising the designer’s respect for the heritage of Valentino, almost singular in this industry compared to his peers, he remarked.

“Sentimentally,” he touted Piccioli’s ability to offer “beauty and dreams,” but “rationally, as an adviser and entrepreneur.”

Ferreri acknowledged that “when the going gets tough, practical decisions must be taken and this was not a surprise,” admitting there had been “several signals [pointing to a need for a change] in the market for a while, despite the strong aesthetic emotions provided at each show.”

He gave a thumbs-up to the idea of Michele joining Valentino. “It would be amazing and, as Martin Margiela told John Galliano arriving as creative director of the brand, ‘take it and make it yours.’”

Bernstein’s Luca Solca clearly differed. “I don’t believe Alessandro Michele may be a good fit for the Valentino brand DNA. I think they will have to look further afield.”

He also said he thought “it was time for Valentino to look for new creative energy. The market hasn’t seen a sequel to the Rock Stud success, and the brand needs new ideas.”

Giovanna Brambilla, partner at Milan-based executive search firm Value Search, drew a series of comparisons between Piccioli and Michele: Both are very much connected to their roots and their hometowns, both initially trained at Fendi with Karl Lagerfeld, and both have professionally grown in their respective brands and brought “great success with their talent.”

Both departed in surprise moves, even if observers wondered whether Piccioli’s all-black collection — the “color of goodbyes” — for fall 2024 “was a prelude to major changes” for a designer who loves color, said Brambilla, who was particularly struck by “the sincere gratitude that both expressed to their teams” in their exit statements, acknowledging that teamwork alone can “realize dreams.”

Brambilla underscored that both Michele and Piccioli used this specific term. “These great creative directors are telling us that in the fashion industry, which moves billions in sales and reports among the highest multiples, there is a need for the intangible, for that magic alchemy that creates and delivers dreams.”

These designers are telling us that “it is not enough to think of today, of quarterly results and investors’ expectations,” as surely these must be taken into consideration, but this industry in particular is different, “it is fueled by dreams, turned into reality by the expert hands of artisans.”

Brambilla concluded by wondering if the business model that has not changed for decades still makes sense, with seasonal collections and shows and special projects supported by enormous investments that “often run out very quickly.” A few brands and designers are breaking this mold, she said, citing Phoebe Philo with her new brand and Moncler with Genius, wondering if these uncertain times will push more companies to radically rethink their strategies.

Rodgy Guerrera, founder of boutique headhunter Rodgy Guerrera & Partners, said how following the pandemic, “the luxury world is filled with uncertainties,” which has led to the success of the quiet luxury trend, as customers seek “intrinsic creativity in the research of fabrics, shapes, craftsmanship and details. And this will be the challenge for creative directors, imagining a new form of creativity.”

As a successor to Piccioli, Guerrera believes a designer attentive to the above would be a good fit. “Observing emerging designers with their own brands or working for established ones, I imagine the creativity of a Millennial would work, someone close to the luxury customer today, who understands what is required today, mindful of issues such as inclusivity and sustainability. A creative director close to the digital world, but also used to archival research, to correctly interpret the history of the brand with a view that is closer to that of the contemporary customer, experimenting and innovating. But we must allow a reasonable time to these new creative directors to express who they are and their vision.”

Piccioli was named sole creative director of Valentino in July 2016, following the departure of Chiuri to join Dior.

Chiuri and Piccioli first worked together at Fendi for 10 years. In 1999, Valentino Garavani selected the designers to boost his brand’s accessories category, which they did, rejuvenating that division. They were promoted to creative directors of accessories at Valentino when Alessandra Facchinetti was assigned the same title for rtw after Garavani retired in 2007. In 2008, they succeeded Facchinetti as creative directors of the brand.

While highly respectful of Garavani and the heritage of Valentino — in particular emphasizing the brand’s couture — Piccioli embraced a more diverse and inclusive approach, distancing himself from the rarefied and jet-set days of yore. In his understated manner, Piccioli continued to live in Nettuno, Italy, a beach town 44 miles south of Rome where he was born, where he met his wife, Simona, and where they are raising their three children. He has said for years that he also considers Valentino his home and has again and again taken the opportunity to pay tribute to the talent of the seamstresses who have long worked for the company — highlighting the exquisite craftsmanship of Valentino’s atelier.

At the same time, he has brought a younger spirit to the maison with a new perspective, for example choosing as Di.Vas brand ambassadors — an acronym that stands for Different Values — Formula 1 champion Lewis Hamilton or Suga, the much-loved member of the boy band BTS. Piccioli telegraphed his message of inclusivity by going contrary to Roman stereotypes, casting Adut Akech and Anwar Hadid for the Valentino Born in Roma fragrance.

With his influential designs, he introduced daring volumes and colors — including the PP Pink new Pantone shade; developed more daywear looks, and dabbled with streetwear. His attention to detail was exemplified, for example, by his careful study of the white shirt for Valentino’s spring 2019 rtw collection.

In July of last year, Kering revealed it bought a 30 percent stake in Valentino for 1.7 billion euros in cash as part of a broader strategic partnership with Qatari investment fund Mayhoola, which controls the couture brand.

Kering has an option to buy 100 percent of Valentino’s capital by 2028, while Mayhoola could become a shareholder in Kering. The new luxury partners are expected to jointly explore further opportunities aligned with their respective strategies, including potential investments beyond fashion.

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In an era of austerity on Wall Street, apparel businesses are more likely to be valued on their profits rather than sales, which usually means lower payouts for founders and investors. That is, if they can find a buyer in the first place.

KEY INSIGHTS

When Milan-based private equity firm Styles Capital announced it acquired the sneaker brand Autry earlier this month, it seemed to signal a reawakening of fashion’s deal market.

Styles Capital paid about €300 million ($327 million) for 50.2 percent of Autry, valuing the company at an impressive six times its sales last year. It wasn’t quite the sort of valuation a hot direct-to-consumer brand might have commanded at the height of the boom – Allbirds’ market capitalisation of $4 billion following its 2021 IPO was roughly 15 times its annual revenue at the time. But it was a surprising splash of good news amid a drought in fashion dealmaking.

Today, there are a number of brands on the auction block, but few interested buyers. Last year, there were 118 acquisitions globally in the category, the lowest count in at least a decade, according to Dealogic. Ganni, A.L.C., Proenza Schouler and Isabel Marant are just some of the brands that have courted buyers or investors in recent years without securing a deal. It’s not just contemporary and luxury labels facing an uphill (though not impossible) climb to seal the deal; the activewear brand Alo Yoga and t-shirt start-up True Classic are among the direct-to-consumer brands currently in the market.

Unfortunately for them, the Autry deal and its revenue-based valuation was the exception that proves the rule, investment bankers and investors with expertise in the fashion space said. When offers are made, they are more likely to follow the more conservative measure of multiples of EBITDA, or earnings before interest, tax, depreciation and amortisation.

Last month, Rag & Bone was acquired by a joint venture between Guess Inc. and brand management firm WHP Global. Guess will pay $56.5 million for its half, which values the brand at $113 million — about six times Rag & Bone’s adjusted EBITDA of $18 million in 2023, but just under half its 2023 sales of $250 million. Or take True Religion, which is currently exploring a sale. With about $80 million in annual EBITDA, it can feasibly sell for $400 million to $600 million, according to a source familiar with the business. If, that is, it can find a buyer in the first place.

Those are the lucky ones, in a sense. Last year, Parade and Tamara Mellon were acquired by manufacturers in what bankers said were likely fire sales last year; sleepwear startup Lunya filed for chapter 11 bankruptcy in June.

“It’s the absolute worst time to sell right now,” said Elsa Berry, founder of Vendôme Global Partners, a fashion M&A advisory firm. “It’s impossible to say where the buyers are … And you’re not going to get a top price unless you are an exceptional brand.”

Today’s market is a return to a sleepier era, before the days of ZIRP, or zero interest rate policy, a period lasting roughly between 2008 and 2021, when central banks globally slashed borrowing costs as a form of economic stimulus. Investors and large companies borrowed billions of dollars, which they poured into fast-growing, often unprofitable brands, such as Allbirds, or retail start-ups like Farfetch and The RealReal, in the hopes of generating big returns down the line as those businesses matured.

Many of those investments did not pan out. Allbirds’ market capitalisation currently hovers around $100 million.

Founders and investors who came of age during the ZIRP days are confronting a harsh reality where the paths to an exit are mostly blocked. On the public markets, even growing, profitable companies like Birkenstock and Amer Sports have failed to command premium valuations, which has had a mirroring effect on valuations in the private market too, bankers said.

For brands the options are stark: accept a lower price and a wider potential pool of buyers, or wait and hope today’s market conditions are temporary, and not the new norm.

“Two years of the pandemic followed by the last 18 months of a reset in the global economy has changed a lot of the calculus of how we start getting liquidity in our portfolio,” said Bill Detwiler, managing partner at Fernbrook Capital Management, an early-stage investment firm that has purchased stakes in Tory Burch, La Ligne and Universal Standard. “We feel that the [market] will open up once we get the election out of the way and interest rates come down.”

Fewer Buyers

The fashion M&A space can quickly shut down in challenging times because the category is particularly vulnerable to shifts in the wider economy. Brands that appeared to be cruising to a multi-billion-dollar exit can suddenly lose momentum if trends shift, or price-conscious consumers pull back on discretionary spending. Case in point is Matchesfashion, which was acquired by private equity giant Apax Partners in 2017 for over $1 billion, and sold late last year to Frasers Group for £52 million ($63 million), amid a broader slowdown in online luxury spending.

Matt Leeds, a former partner at L Catterton who launched his own private equity fund, Forward Consumer Partners, last year, said he sets an especially high bar when considering investing in an apparel brand, as opposed to food or other categories. Start-ups that might have a few years of rapid growth, and zero profits, need not apply.

“I would be interested in brands with a proven track record of success over decades and are still relevant today,” he said.

Tapestry’s $8.5 billion blockbuster acquisition of Michael Kors-owner Capri Holdings is a prime example of this thesis in action. Capri’s brands, which also include Versace and Jimmy Choo, have struggled to resonate with consumers in recent years, their name recognition has the potential for massive scale under the right management.

Higher borrowing costs and unpredictable consumer spending have also kept large retail holding groups on the sidelines. VF Corp. has historically grown through acquisitions of hot brands like Supreme; now it’s looking to sell some assets. Kering, which bought a stake in Valentino last year, as well as the fragrance brand Creed, is also unlikely to add to its portfolio in the near term as it integrates those acquisitions and focuses on reviving Gucci, said Berry of Vendôme Global Partners.

Other luxury groups may be distracted by new dynamics in the sector, such as challenges around wholesale, as well as a volatile macroeconomic environment, she added. Some houses in healthier positions have other priorities; Puig, for instance, is preparing for an upcoming IPO.

“I don’t think there is a large number of strategic buyers in the short term,” Berry added. “But of course LVMH can always make a move, given their sheer scale and diverse businesses.”

Exceptional Players

Well-run, appealing brands will still find buyers at premium valuations.

A buzzy business that’s growing both in terms of sales and profitability can command EBITDA multiples of 12 to 15 in their valuations, according to Matthew Tingler, managing director at Baird’s consumer investment banking group. Larger brands showing growth, profitability and a strong brand DNA across multiple geographies and product categories can be valued at mid-teen multiples of EBITDA or higher, said Berry.

At brands with major cultural heat, topline growth can still be an important metric when it comes to formulating valuations, Tingler said. For those lucky few, the sky’s still the limit.

Alo Yoga was reportedly seeking new investment at a $10 billion valuation last fall, almost certainly at a higher ratio to EBITDA than publicly traded category leader Lululemon merits. While it remains to be seen if the brand will hit its target, Alo’s faster growth should allow it to command higher multiples, Tingler said.

The same goes for Skims, which was valued at $4 billion last year on estimated annual sales of $750 million and 27 times its EBITDA; it’s an unusually high multiple, but still possible in today’s environment — that is, if you’re Skims.

Survival Mode

Skims aside, most brands have little choice but to harness a sense of financial discipline: Operate a lean business and generate cash flow to fund capital expenditures. If possible, brands should tap into their base of existing investors for necessary cash infusions.

“If someone is selling today, it’s either because they’re distressed, or their investor wants to get out and doesn’t want to keep putting money in,” Berry said.

For the most part, dealmakers don’t anticipate current market conditions to change anytime soon.

“The investment climate will stay the same,” said Tingler of Baird. “For [valuations] to go up again, interest rates will have to go down and there needs to be a more peaceful geopolitical environment. I don’t think it will change anytime soon.”

But being forced to run a scrappy business isn’t a bad thing. A high profit margin, after all, will be a major asset for fundraising or acquisitions down the road. And the more investors a business takes on, the fewer exit options there are, according to Jenny Gyllander, a venture capital veteran and founder of Thingtesting, an online platform for discovering online brands. Not to mention, diluted equity.

“People have been unable to raise funds for a while now, and that’s pushed them to be really creative,” Gyllander said. “Everyone’s now like, ‘Let’s be profitable from day one,’ and they want to be in control of how they’re growing.”