The Covid-19 pandemic hit many companies in the Fashion sector. In 2020, throughout Brazil, the
segments of apparel, footwear and accessories closed 22,900 stores more than
opened, as determined by the National Confederation of Commerce of Goods, Services and Tourism (CNC).

In Rio de Janeiro, the impact was immense, even because the sector is very relevant in the economy of the State where, according to the most current data from FIRJAN (Federation of Industries of the State of Rio de Janeiro), adding industries, stores and other activities, totaling 27 thousand companies and 195 thousand workers with a formal contract. Companies can close. But how resilient are they the Fashion Brands?

Most Brands will survive! It is often observed large companies in the sector of
Fashion buying or joining others, to strengthen its participation in the local market and
national and even in exports.

Since at least 2010, Equity Investment Funds have been buying installments or the
the entirety of the share capital of many companies in the Fashion sector, whether the traditional ones, as successful newcomers, especially given the strength of their Brands.

Recently, strategic moves of this type have taken place, with strong repercussions on the stock exchange. Values (B3), such as the proposal of the Soma group, owner of the Animale and Farm brands, to acquire Cia. Hering for R$ 5.1 billion.

In Merger and Acquisition (M&A) business transactions, the Brand is one of the most, if not the biggest, targets of interest, given that its valuation (economic value asset) often reaches more than 50% of the total.

It is not uncommon for a company in the Fashion sector that has built its own brand relevant to the
over time, encounter financial difficulties, often due to weaknesses management, thus becoming in the strategic interest of economically stronger groups.

We have even observed that the “asset” Brand is being used to serve as a guarantee in financing operations. And in Judicial Recovery and Tax Recovery proceedings, at is often the main asset to be taken for granted.

Also, one of the economic effects of the Covid-19 pandemic was that it increased in companies
family members, especially in the Fashion sector, the desire to speed up succession, sharing and
inheritances, in which the financial valuation of physical assets is now added to the valuation of the Brand.

And what will happen to Fashion companies and their wonderful Brands, in 2022, when
implement the economic recovery made possible by vaccinating the majority of the population?

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