Consumer & Retail | Q2 2025 | PCE Investment Bankers

Executive Summary

Valuation stability returned in Q2 2025, despite ongoing macroeconomic challenges. While transaction volume dipped slightly year-over-year to 1,203 deals, median EBITDA multiples rose to 9.15x — up from 8.92x in Q2 2024 — signaling renewed buyer confidence in quality assets. Revenue multiples also increased to 1.40x, reflecting a stronger appetite for consumer businesses with scalable models and resilient demand. Strategic buyers remained dominant, while financial sponsors showed selectivity. Notable transactions showcased interest in brand-driven, lifestyle, and hospitality assets. Overall, M&A activity held firm amid persistent rate pressure and cautious capital deployment.

Market Dynamics

Amid rising input costs in Q2 2025, consumer and retail M&A saw a slight slow down as dealmakers adjusted to higher capital costs. Strategic buyers remained active, focusing on resilient, margin-strong businesses in health, wellness, and experience-driven categories.

Despite macroeconomic headwinds, high-quality brands with loyal customer bases and scalable digital platforms continue to attract acquirers seeking margin accretion and portfolio diversification.

Buyer Landscape

Strategic Acquirers: Strategic buyers comprised 87% of Q2 2025 transactions (920 of 1,057), reinforcing their role as the primary consolidators in the Consumer & Retail sector. Activity remained strong in branded retail, hospitality, and consumer services with high customer lifetime value.

Financial Buyers: Financial sponsors represented 13% of deal volume (137 of 1,057), with a focus on scalable, cash-generative businesses. Selectivity remained high, with capital deployed toward differentiated platforms offering growth through franchising or market roll-ups.

Industry Comparison

In Q1 2025, global M&A activity experienced a significant decline, with the total number of deals announced reaching 9,022, marking the lowest level since Q2 2020. This downturn was primarily driven by heightened geopolitical tensions and economic uncertainties, which led to increased caution among investors. Despite this, certain sectors within the consumer & retail industry, particularly luxury fashion and beauty, showed resilience, with strategic acquisitions focusing on brand consolidation and market expansion. This indicates a selective but steady interest in high-value assets within the sector.

Geographic Expansion

Top U.S. States: California led all states with 113 deals, followed by Texas (95) and Florida (93), highlighting sustained M&A concentration in major consumer markets.

Cross-Border Trends: U.S.-based targets continued to attract strong international interest, with notable cross-border acquisitions reflecting global appetite for established U.S. consumer brands and assets.

Notable Transactions

Largest Transactions Closed

Other Strategic Buyer Transactions Closed

Other Financial Buyer Transactions Closed

Emerging Trends

Key trends shaping Consumer and Retail M&A:

1. Health & Wellness Focus
   Strategics and PE firms targeted brands in functional foods, supplements, and “better-for-you” CPG as consumers increasingly prioritize health post-pandemic. Recent transactions include Danone acquisition of Kate Farms, a U.S. plant-based formula maker, to enhance its specialized and medical nutrition portfolio.¹
2. Omnichannel Integration Acceleration
   Retailers and e-commerce players pursued M&A to enhance last-mile delivery and unify commerce capabilities. Target, for example, made significant internal investments in logistics technology to strengthen its control over the end-to-end customer journey. Similarly, Stord expanded through acquisition, purchasing UPS’s Ware2Go unit to add 2.5 million sq ft of warehouse space and bolster its last-mile delivery and fulfillment capabilities for e‑commerce merchants.²
3. Premium on Direct-to-Consumer (DTC) Models
   Valuations favored DTC brands with robust customer data and subscription models, commanding 15–20% higher multiples than wholesale-centric peers.³
4. Subsector Spotlight: Specialty Retail
   Continued consolidation among outdoor and sporting goods brands reflects resilient demand, highlighted by Dick’s Sporting Goods’ acquisition of Foot Locker. Additionally, Dollar Tree’s divestiture of Family Dollar to Brigade Capital marks a notable transaction reshaping the discount retail landscape.⁵
5. Subsector Spotlight: Food & Beverage
   Beverage players expanded into functional drinks via bolt-on acquisitions to capture Gen Z consumers. As is evident in the acquisition of the probiotic soda brand Poppi by PepsiCo.⁴

Outlook for Next Quarter

Opportunities: Ongoing consumer demand for value and convenience, coupled with technological innovation (AI-powered personalization, supply chain analytics), will support M&A activity in discount retail and e-commerce infrastructure.⁵

Risks: Persistent labor shortages and wage pressure (average hourly earnings up 5.1% YoY in Q2) may weigh on operational margins for labor-intensive retailers.⁵

Predicted Activity: Expect increased carve-outs and portfolio optimization as corporates shed underperforming divisions, creating opportunities for mid-market buyers and PE platform builds.⁵

PCE Transactions

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