After a tumultuous election year, the consumer deal market in the U.S. is expected to surge in 2025.
According to a new report from PwC, consumer market deal activity was up 4 percent in the second half of 2024, compared to a 4 percent decline in the first half of the year. And this growth is on track to continue into 2025, as executives seek out inorganic growth strategies to counter price stagnation and slower consumer demand. The report, which analyzed S&P Capital IQ data, also found that deal volume in the consumer sector at the start of Q4 had already started to increase, which bodes well for 2025.
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“M&A has always been an important aspect for growth and innovation in this space,” said Mike Ross, PwC’s U.S. consumer markets deals leader, in an interview with FN. “And I think what we’re seeing right now is a bit of a resurgence or a return to normal.”
In the footwear sector, deal activity notably picked up in the second half of 2024 after a slow start to the year. In June, RG Barry Corporation revealed it had been acquired by the Marubeni Growth Capital U.S. (MGCU) a subsidiary of the Tokyo-based Marubeni Corporation. And in July, JD Sports Fashion completed its deal to acquire Hibbett Sports .
More recent deals have included Steve Madden’s December acquisition of the ATM apparel brand , Vida Shoes International’s September acquisition of Aquatalia and Bluestar Alliance’s September acquisition of Off-White from LVMH.
According to Ross, private equity investment groups have held onto some assets for longer than their usual holding time. Now, favorable conditions in the U.S. market are encouraging them to make more deals.
“They’re getting increasing pressure from their investor groups to create liquidity,” Ross said. “When you combine that with some of the other positive things we’re seeing here, it’s another reason why I’m a bit more bullish on the activity uptick heading into 2025.”
Throughout the back half of 2024, Ross noted that several of his clients in the consumer space have focused on becoming “deal ready” in order to be set up to make the necessary moves when the timing is right. This preparation involves undergoing portfolio reviews, analyzing balance sheets and focusing on categories that can be useful for inorganic growth through M&A.
When it comes to the type of acquisitions to expect in the consumer space, smaller deals are the most common, though larger deals like the Saks and Neiman Marcus merger are still on the table. When it comes to the smaller deal side, Ross said there is more intentionally with regard to how a new asset fits in with the long term goals of a company.
“They’re spending a lot more time thinking about how to preserve the secret sauce of what they’re buying, which is so important in the consumer space,” Ross said. “They’re making sure that we don’t just buy this company and run them through our M&A acquisition machine without any thoughts about how are we actually creating value and preserving the value of what we bought.”
Within footwear, Ross said newer brands that have already succeeded in DTC and social channels would likely be “interesting” targets for larger players as well as private equity.
“There is still a lot of capital and a lot of specialty expertise in those mid-market private equity players to actually be successful in taking these earlier stage brands and really helping them grow in this competitive environment,” Ross said.
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