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· Posted on
February 21, 2024

Linen lovers UNITE: Adairs is sick of flogging quilt covers so it's bringing in the furniture

Adairs is the place you go when you wanna spruce up your bedroom sitch from COVID.

What's the key learning?

  • Adairs has acquired Focus on Furniture for $80 million in a play to expand into the furniture and bedding industry
  • The price equates to 2.4 multiple of Focus' EBIT for 2021
  • One of the most common ways to value a company for an acquisition is to pay a 'multiple'.

Background: Adairs is the homewares retailer known for linen and bedding - the place you go when you wanna spruce up your bedroom sitch from COVID.

What happened: The bedding crew had a mighty good year last year. Their net profits were up 80% and revenue hit nearly $500m. Adairs have been on the hunt to grow further. Last year, they acquired NZ based retailer, Mocka. 

What else: And now, Adairs has acquired Focus on Furniture for $80 million in a play to expand into the furniture and bedding industry. The price equates to 2.4 multiple of Focus' EBIT for 2021.

So what's the key learning?

💡Valuing a company for an acquisition is part science, and certainly part art. One of the most common ways is to pay a 'multiple'.

💡You might pay a multiple of:

  • The company's net profit from the last year
  • The company's revenue from the last year
  • Or the company's EBIT (earnings before interest and tax) from the last year.

💡Generally, each industry has its own 'multiple' based on opportunities for growth and scalability. Speaking of benchmarks though, Adairs acquired Mocka on an 8.5 multiple just last year, so it’s possible that Focus might be feeling a little short-changed. 

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