M&A and Capital Markets Update - Food and beverage Q4 2013

After a strong finish in 2012 and a slow start in early 2013, US middle market M&A activity in the food and beverage sector experienced a significant uptick during the second half of the year. Both strategic and private equity buyers have continued to demonstrate an appetite for high quality food and beverage assets and brands with several large deals announced and set to close in early 2014 (the largest being Sysco’s $3.5 billion acquisition of US Foods). Food and beverage strategic acquisitions seem to be focused on either buying market share or buying earlier stage companies with new product lines or categories. Some companies like Nestle are selling off brands they consider to be underperforming. As several key indicators conducive to deal making remain in place including strong performance in the stock markets, improved access to debt financing, and cash balances for both corporate and private equity firms at historically high levels, 2014 is poised to be a strong year for M&A deal activity in the food and beverage sector.

M&A/food and beverage and capital markets metrics

Commodity prices
     Corn (per bushel)
     Beef (per cwt.)
Valuation and M&A deal activity12.5x
Cash and ST investment of S&P 500 food and beverage companies$45 billion
Private equity capital raised year-to-date$179 billion

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