As Consumer Preferences Evolve, So Does M&A

Now more than ever, people are finding new ways to live, work, play and shop. Everyone is a consumer. Yet the branded goods they consume and the companies they support are changing at a rapid pace, and so are the M&A deals and trends that follow. Many new realities have altered consumer behavior and preferences—including demographic diversity, technological developments, and a greater focus on environmental and social responsibility, just to name a few.

Branded consumer categories vary widely, from apparel through beauty and personal care, to electronics, food and beverage, health and wellness, home furnishings, pet food and sporting goods. When acquiring these types of companies, the perceived value lies in the eyes of the beholder. Often, a target’s value depends on the situation and desired outcome. Adding an operating consumer product company to an existing portfolio is very different from making a platform investment.

Historically, midmarket deal professionals focused on a handful of characteristics when evaluating consumer product investments. But a new set of criteria is redefining these deals. As inorganic growth has taken precedence for consumer products, three attributes—brand power, high-growth opportunities and operational edge—have become key priorities and building blocks for value creation.

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This article is partially reprinted here with permission from Middle Market Growth.

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