FOOD & BEVERAGE M&A MARKET DYNAMICS
U.S. Food and Beverage M&A activity concluded 2024 on a high note, with transactions increasing 18.4% in Q4 compared to the same quarter last year. In total, 2024 saw 501 transactions, marking a 7% rise from 2023.
As we move into 2025, U.S. M&A activity looks promising, with several factors poised to sustain the momentum including stabilized interest rates, significant uninvested capital, strong employment and income growth, and continued robust consumer spending.
What We’re Discussing With Clients
Private Equity Faces Pressure to Return and Deploy Capital
Over the past three years, higher interest rates have dampened private equity M&A activity by driving up borrowing costs and in some cases reducing valuation multiples. As a result, financial sponsors have delayed exits, creating a backlog of assets waiting to reach market. From the private equity buyer perspective, with $1.2 trillion in unallocated capital as of December 2024, firms are facing increasing pressure to aggressively seek opportunities to invest.
Non-Traditional Deal Structures to Achieve Objectives
Going beyond “off-the-shelf” deal structures and fostering collaboration between clients and buyers is crucial to designing a sale process that mutually aligns the interests of both parties. By leveraging mechanisms such as earnouts, minority interest sales, management incentives, and rollover equity, both parties can achieve an optimized outcome. These tailored solutions effectively mitigate risks and ensure mutually beneficial results.
Navigating a Dynamic Tariff Landscape
While the situation continues to evolve daily, the current U.S. administration has signaled a willingness to wield tariffs as a diplomatic tool. The uncertainty around these measures has created a fluid landscape, with businesses and potential acquirers forced to continually analyze the potential consequences of proposed changes. During the sale process it is critical that all parties stay abreast of the latest developments and work collaboratively to measure their possible impact on the transaction.
