What We’re Discussing with Clients
Buyout firms hold record levels of dry powder, signaling private equity’s continued involvement in global M&A. It is estimated there is $1.3 trillion of capital available for platform investments and add-on acquisitions. Despite conversations surrounding a macro slowdown and rising borrowing costs, this undeployed capital should keep M&A volume at or near record highs, particularly for strong performing businesses.
It is more important than ever to pursue the correct marketing process for a sell-side transaction. Whether this entails a broader auction to drive increased competitive tension, or a more targeted “fire-side chat” approach to review valuation expectations in a process, tailoring the right process is crucial in achieving shareholder objectives.
Volatility across markets has prompted questions during M&A processes about sustainable financial performance. Corroborating go-forward earnings and preemptively crafting this story can help drive incremental shareholder value.
U.S. Food & Beverage M&A Activity Shows Resilience
- Global Food & Beverage M&A deal volume decreased for the fourth straight quarter in Q2-22, as total transactions fell ~3% to 428. Further, the 428 total deals in Q2-22 were ~20% less compared to the prior year period.
- U.S. Food & Beverage M&A deal volume on the other hand saw an increase, totaling 159 deals in Q2-22, compared to 150 deals in Q1-22. While deal activity through the first two quarters in 2022 are subdued relative to the prior year period, it is a result of significantly higher than normal M&A levels in 2021.
- Strategic buyers represented ~92% of all Q2-22 Food & Beverage M&A transactions in the U.S., slightly higher than the three-year average of ~90% for this buyer group.
- With uncertainty looming in the economy, Food & Beverage global deal volumes are below recent levels as market participants are learning to navigate around inflation, rising interest rates and global conflict. However, transaction volumes are positioned to remain steady through the end of 2022 as companies and investors have indicated an appetite to continue putting their robust amounts of capital to work through M&A.
Read Food & Beverage M&A Pulse Q2 2022 Full Report