How Can Struggling Luxury Brands Secure Premium Valuations During M&A?

India’s luxury goods market, valued at ₹65,000–₹75,000 crore with a 10–12% CAGR, spans fashion, jewellery, real estate, beauty, and collectibles. Despite financial struggles, many luxury brands command premium valuations in Luxury M&A due to their brand value, heritage, and intellectual property (IP). Driven by globalisation, generational shifts, and private equity interest, Luxury M&A offers opportunities for struggling brands to unlock latent potential. This article, crafted for senior leaders, outlines strategies to secure premium valuations by bridging the disconnect between financial distress and intrinsic brand value.

Unlocking Brand Value for Premium Valuations

India’s luxury sector attracts global conglomerates and PE firms seeking brands with cultural cachet, even when financials falter. Struggling brands often retain significant brand value through loyal clientele, heritage narratives, or unique IP, enabling premium valuations in Luxury M&A. For example, a heritage jewellery brand with declining margins may hold valuable GI-tagged designs. Cross-border deals, succession-driven exits, and PE-backed turnarounds amplify opportunities for such brands to achieve premium valuations despite challenges.

1. Recent M&A Trends of Premium Valuations (2025)

• Key trends shape Luxury M&A for struggling brands:

1. Legacy Brand Acquisitions: Global and domestic players target underperforming brands with latent intangible assets, such as heritage or design archives, to secure premium valuations.
2. PE-Driven Turnarounds: PE funds acquire distressed luxury assets, focusing on revival potential through operational and brand rejuvenation to achieve premium valuations.
3. Future-Oriented Deals: Structures prioritise future brand value creation, using earn-outs and performance-linked clauses over current financials.
4. Government Incentives: Production-Linked Incentive (PLI) schemes and GST credits for IP-rich handloom and jewellery brands enhance premium valuations by supporting growth.

2. Challenges Faced by Struggling Luxury Brands

• Struggling brands face hurdles that obscure their potential for premium valuations:

1. Financial Struggles: Declining margins, high debt, and excess inventory deter traditional valuation models.
2. Brand Fatigue: Failure to resonate with Gen Z or premium consumers diminishes brand value.
3. Digital Underperformance: Weak D2C channels or CRM systems limit customer engagement and revenue.
4. Leadership Bottlenecks: Founder-led models often resist innovation, hindering scalability.

3. Strategies to Secure Premium Valuations in Luxury M&A

Struggling brands can achieve premium valuations through strategic repositioning and operational enhancements.

• Brand Positioning & Narrative Enhancement

1. Reframe Heritage: Position culture, craftsmanship, and provenance as storytelling assets to enhance brand value. For instance, a struggling textile brand can highlight its royal patronage history.
2. Digital Rebranding: Use influencers and digital campaigns to refresh brand equity, targeting younger demographics.

• Financial Engineering

1. Debt Recapitalisation: Restructure debt via bridge financing to present a cleaner balance sheet, boosting confidence in premium valuations.
2. Highlight Core Assets: Emphasise high-margin SKUs or cash-converting products to reposition the earnings narrative.

• Operational Streamlining

1. Simplify Operations: Reduce SKU complexity and shift to asset-light hybrid distribution by renegotiating retail leases.
2. AI-Driven Inventory: Implement AI-based planning to eliminate dead stock, improving financial health and supporting premium valuations.

• IP & Asset Monetisation

1. IP Valuation: Register and value signature designs, archives, or GI certifications to demonstrate brand value.
2. Licensing Opportunities: Pursue pre-acquisition licensing or co-branding to showcase market potential and justify premium valuations.

• Smart Deal Structuring

1. Earn-Outs: Propose earn-outs tied to brand revival KPIs, such as revenue growth, to align incentives.
2. Partial Stake Sales: Opt for minority investments with founder influence to signal long-term upside.

4. Hybrid Consulting Lens Applications

• A multidisciplinary approach ensures struggling brands maximise premium valuations:

1. Legal: Strengthen IP ownership, protect against counterfeiting, and ensure cross-border compliance to build investor trust.
2. Technology: Deploy CRM analytics to highlight untapped customer loyalty and repeat revenue potential, reinforcing brand value.
3. Finance: Emphasise cost savings, global market arbitrage, and D2C margin improvements as valuation levers.
4. Management: Transition founder-led models to professionalised brand stewardship via advisory boards, preserving heritage while enabling scale.

Illustrative Case Studies

• Revival Acquisition Case

A 90-year-old textile house with ₹300 crore in debt restructured its finances, implemented CRM analytics, and digitally archived its GI-tagged design IP. By showcasing its heritage narrative, it secured a ₹120 crore valuation from a global fashion conglomerate 3x its book value demonstrating the power of premium valuations in Luxury M&A.

• Modernisation Play

A Tier-1 jewellery brand facing margin erosion launched an AI-led concierge app, streamlined inventory, and repositioned its bridal segment. Within 18 months, it sold a 40% stake to a Middle East luxury group at a premium valuation, driven by enhanced digital presence and operational efficiency.

Conclusion

Struggling luxury brands can secure premium valuations in Luxury M&A by repositioning brand value, digitising operations, monetising IP, and structuring deals to reflect future upside. By blending cultural storytelling, financial restructuring, and technology-driven insights, leaders can transform financial struggles into opportunities for high-value acquisitions in India’s vibrant luxury market.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

For expert legal help, please contact us:

• Email: inquiry@lawcrustbusiness.com