What We’re Discussing with Clients
Data through Q3-2023 show an improving economic and pricing environment compared with the trends observed in previous quarters. Our view is this improving trend supports the theory of a more likely “soft landing” and portends a stronger-than-expected 2024 for M&A transactions.
Today’s M&A environment tends to favor strong companies. While some sellers are pressing pause in an attempt to time the market, good companies (those with strong financials, good growth prospects, strong management teams, differentiated offerings, etc.) can attract value- and objective-maximizing outcomes in the current market.
M&A transactions can take many forms and transaction processes can be designed to achieve nearly any objective. For example, seller preferences regarding structure, a buyer’s profile or retained ownership post-transaction should be communicated to potential buyers early in the process to optimize transaction outcomes. Do not be shy about exploring alternatives and options with your investment banker and M&A advisors.
Global Food & Beverage M&A Experiences Downturn
- Despite nearly stabilized inflation, Global Food and Beverage M&A activity still experienced a 29.1% decline in Q3-23 transactions, relative to the prior year quarter.
- U.S. Food & Beverage M&A deal activity also dipped in Q3-23 to 114 transactions, representing a 16.1% decrease from the 136 deals in Q3-22.
- One notable trend within the M&A landscape has been private equity’s declining share of deals. Strategic buyers represented 100% of all Q3-23 Food & Beverage M&A transactions in the U.S., illustrating a complete absence in financial buyer activity.
- Private equity has historically relied more on access to leverage for financing their transactions, and heightened borrowing costs have constrained their ability to consummate deals. Despite this, the private equity industry has $1.4 trillion in unspent dry powder, and thus remains a formidable buyer group going into Q4.
- Despite the decline in M&A, executives remain optimistic about their industry as supply chains continue to improve and companies are better able to control margin through reduced inflationary pressures.
Read Food & Beverage M&A Pulse Q3 2023 Full Report
