Q2 2019 Food & Beverage M&A Update

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GCG’s Q2 2019 Food & Beverage M&A Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples and the state of the middle-market M&A environment.

Key findings include the following:

    • Q2 2019 saw strong gains in the Food & Beverage (“F&B”) industry and the broader U.S. equity market despite ongoing trade tensions and concerns of a global growth slowdown. The market rally through Q2 2019 was largely driven by the prospect of an upcoming Fed rate cut. For the 3-year period ending June 30, 2019, the S&P 500 index was up by 39.9%. The F&B industry as a whole exhibited moderate performance on a 12-month basis, with certain segments performing stronger than others. The industry was led by the Restaurant and Distribution segments, both of which outperformed the S&P 500 over the 3-year period with stock gains of 77.7% and 42.9%, respectively.
    • In Q2 2019, the F&B sector saw smaller transaction values and a lower number of transactions compared to recent quarters. However, the overall number of transactions remained strong with 344 transactions in Q2. Strategic buyers continue to dominate overall deal activity and have sought acquisitions to offset slowing organic growth and to diversify their offerings. In Q2, financial buyers represented 16% of all M&A activity in the industry.
    • The Restaurants category led activity, accounting for nearly 37% of total F&B transaction volume. Packaged Foods and Meat companies proved to be attractive targets as well with over 30% of transaction volume.
    • Based on a representative set of publicly traded companies across the F&B industry, public companies traded at an average multiple of 14.3x EBITDA and 2.7x revenue. Among the six sectors disclosed in this report, the strongest trading multiples were observed in the Beverage and Restaurant sectors.

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