Food & Agriculture | Q3 2025 | PCE Investment Bankers

Executive Summary

M&A activity in the Food & Agriculture sector moderated through Q3 2025, with 366 closed transactions (LTM), down from 429 in Q3 2024. The decline reflected higher financing costs, subdued consumer spending, and delayed closings amid inflation-driven margin pressures.

Even so, deal flow remained steady in branded foods, processing, and specialty ingredients, where strategic acquirers pursued scale and supply chain resilience.

Strategic buyers accounted for roughly 79% of total deals (289), while financial buyers represented 12%, underscoring selective sponsor participation.

Valuations eased slightly, with median TEV/EBITDA at 9.54x and TEV/Revenue at 1.37x, as investors prioritized earnings quality and defensible market positions.

Notably, Kraft Heinz’s announced spin-off of its North American meals and condiments division signaled renewed portfolio reshaping among large-cap food companies, hinting at continued realignment in 2026.¹

“Despite a slowdown in overall deal volume, the Food & Agriculture sector remains fundamentally strong,” said Michael Poole, Managing Director at PCE. “Essential categories like processing, ingredients, and branded foods continue to see steady buyer demand, reflecting the sector’s resilience and long-term importance.”

Market Dynamics

Valuation pressures intensified in Q3 2025 as higher financing costs and cautious lending continued to weigh on deal pricing. Revenue multiples eased to 1.37x, while EBITDA multiples declined to 9.54x, marking a further contraction from 2024 levels.

Buyers remained selective, prioritizing targets with proven profitability, operational efficiency, and differentiated product portfolios over purely growth-oriented assets.¹

Buyer Landscape

Strategic Acquirers: Strategic buyers dominated activity, accounting for 79% of transactions (289 of 366), with consolidation driven by established food manufacturers and processors expanding category breadth and supply chain control. Notable transactions included Post Holdings’ $880M acquisition of 8th Avenue Food & Provisions and C&S Wholesale Grocers’ $2.1B purchase of SpartanNash Company, underscoring continued appetite for scale and distribution capabilities.¹

Financial Buyers: Financial sponsors represented roughly 12% of deal volume, maintaining a selective posture amid tighter credit markets. Activity focused on niche and value-added food platforms, including acquisitions such as Daniele International LLC by Industrial Opportunity Partners and Rangen, LLC by Balmoral Funds, reflecting ongoing interest in stable, margin-resilient assets.¹

Industry Comparison

The Food & Agriculture sector trailed broader market activity in Q3 2025, as transaction volume fell 15% year over year amid ongoing valuation compression and tighter credit conditions. Despite the slowdown, the industry remains relatively defensive compared to cyclical consumer sectors, supported by stable demand and resilient supply chain fundamentals.

While global M&A activity in food production and processing is expected to dip modestly in 2025, analysts anticipate stabilization heading into 2026 as financing conditions ease and strategic acquirers reenter the market with renewed confidence.

Geographic Expansion

Top U.S. States: California led all states with 60 transactions, followed by New York (22) and Florida (25), underscoring the strength of coastal markets with deep agribusiness networks and food innovation clusters. The Midwest remained active as well, with Illinois (20) and Wisconsin (12) contributing meaningful deal volume driven by processing, packaging, and distribution assets.¹

Cross-Border Trends: While U.S.-based targets accounted for most transactions, cross-border participation persisted, led by Canadian and European buyers seeking growth and diversification within U.S. food production, ingredients, and distribution segments. 

Notable Transactions

Largest Transactions Closed

Other Strategic Buyer Transactions Closed

Other Financial Buyer Transactions Closed

Emerging Trends

Key trends shaping Food and Agriculture M&A:

1. Sustainability-Driven Consolidation
   Major food companies are investing in regenerative agriculture to promote sustainability. For example, McDonald's announced a $200 million investment to support regenerative practices on U.S. cattle ranches, aiming to enhance soil health and reduce synthetic chemical use across 4 million acres in 38 states.⁴
2. Shift Towards Cleaner Ingredients
   Consumer demand for healthier, more natural foods is reshaping product formulations. Tyson Foods plans to remove high-fructose corn syrup, sucralose, and synthetic antioxidants from U.S. products by the end of 2025.⁸
3. Challenges in Organic Food Pricing
   The U.S. has imposed new import restrictions and tariffs on organic sugar, particularly from Brazil, which supplies 40% of the U.S. supply. Some manufacturers anticipate price increases of up to 100% due to certification and sourcing constraints. The Organic Trade Association warns of severe impacts on the industry, as organic sugar substitutes are not viable due to strict ingredient certification and segregation rules.⁵
4. Advancements in Agricultural Technology
   The U.S. agriculture industry is undergoing significant transformation with advanced technologies shaping farming practices. By 2025, over 60% of U.S. farms are expected to adopt precision agriculture technologies for crop management. Additionally, U.S. farmland dedicated to sustainable practices is projected to increase by 25% between 2020 and 2025.²
   

Outlook for Next Quarter

Opportunities: The focus on sustainability and technological advancements presents opportunities for M&A activity, particularly in Agriculture Tech and ESG-compliant companies. The USDA forecasts a 26.4% improvement in net farm income for 2025, attributed to decreased production expenses.⁴

Risks: Ongoing challenges such as labor shortages and rising input costs may impact margins, potentially affecting deal valuations. The USDA notes that while gross cash farm receipts are expected to rise, farm-related cash income remains steady, indicating potential margin pressures.⁴

Predicted Activity: M&A activity is expected to remain steady, with strategic buyers continuing to seek acquisitions that align with long-term sustainability goals. The USDA's forecast of improved net farm income and decreased production expenses may encourage investment, while ongoing challenges could temper deal activity.⁴ 

PCE Transactions

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