Capstone Partners Reports: Consumer M&A Market Rebound Realized in 2024, Poised to Accelerate in 2025

Core Insights - Capstone Partners' Annual Consumer M&A Report indicates a positive outlook for the Consumer industry in 2025, driven by improvements in M&A activity and valuations in 2024 [1][2] M&A Activity and Valuations - In 2024, Consumer M&A volume rebounded year-over-year, with a slight increase in overall M&A valuations, primarily driven by corporations making strategic acquisitions [2] - Approximately 70% of all consumer M&A transactions in 2024 were conducted by corporations, compared to around 30% from private equity funds, signaling a favorable view of M&A as a return on investment strategy [2] Sector Performance - Public consumer stocks have shown inconsistent performance, with only Tactical, Home Goods, E-Commerce, and Sports Technology sectors outperforming the S&P 500 return of 24% in 2024 [3] - Key economic indicators such as moderating inflation and healthy GDP growth were noted, with the ISM Manufacturing Index rising to 50.9 in January 2025, indicating the first expansion in the U.S. Manufacturing sector in 26 months [3] Market Sentiment - Nearly two-thirds of middle market CEOs have a positive outlook for the Consumer industry in 2025, an increase from 60% in the previous year [3] - A rotation from Consumer Staples to Consumer Discretionary is being observed, with discretionary companies recently outperforming staples, suggesting potential value appreciation in strong markets [4] Future Outlook - The report suggests that a combination of over $1 trillion in private equity dry powder and public consumer companies actively pursuing acquisitions could ignite a rally in M&A activity in 2025 [4] - Expectations for Consumer industry performance and M&A in North America in 2025 are optimistic, with specific sectors poised to attract buyer interest [6]