What We’re Discussing with Clients
Sellers need to understand their transaction objectives prior to launching a process to sell their business. Doing so increases the probability of closing a successful transaction. Common transaction objectives are valuation and deal terms, legacy preservation, employee retention, shareholder and management team reinvestment / ownership opportunities, and strategic vision and alignment with the buyer. Setting a pecking order of what is important to a seller early will support a transaction process designed to optimize their exit.
The real estate owned by the Company, or through a related party, can be optimized in a sale process. It is easy to overlook the real estate as a key value contributor to a transaction. When handled correctly, real estate and company value should both be optimized in a sale process. This can create value arbitrage that can benefit the sellers.
Global supply chain pressures are subsiding, but that has not fully translated to normalized backlogs. Many companies are still experiencing trapped backlogs in their business, which should be analyzed to determine how to appropriately handle in a sale process. If not handled correctly, the outcome could mean enterprise value is left on the table.
Global Food & Beverage M&A Remains Steady
- Global Food & Beverage M&A deal volume increased for the second consecutive quarter, increasing 9.2% in Q4-22 compared to Q3-22. The 476 total transactions in Q4-22 was on pace with the 474 deals completed in the prior year Q4-21 period.
- U.S. Food & Beverage M&A deal activity notched higher in Q4-22 totaling 147 transactions, rebounding from a decrease in the prior quarter. While deal volume in 2022 ended behind that of 2021, it can be partially attributed to the robust M&A time period experienced post-pandemic.
- Strategic buyers represented ~89% of all Q4-22 Food & Beverage M&A transactions in the U.S., consistent with historical averages.
- Overall, F&B M&A activity was lower throughout 2022 relative to 2021 as buyers paused their rapid pace of deal-making. Investors showed restraint given the uncertain macro-environment attributable to inflation, rising interest rates, lingering supply chains issues, etc. Despite these challenges, F&B executives remain confident in the future for their companies as consumer demand continues to remain steady and evidence more resiliency than other markets, leading to optimism for increased M&A levels in 2023.
Read Food & Beverage M&A Pulse Q4 2022 Full Report