GCG’s Q4 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:

• • Q4 2019 saw strong gains in the Food & Beverage (“F&B”) industry and the broader U.S. equity market as reports emerged on an agreement of an outline for the “phase one” U.S. and China trade deal. Fading recession fears and record low unemployment figures also drove markets higher. For the 3-year period ending December 31, 2019, the S&P 500 index was up 43.1%. The F&B industry exhibited moderate performance on a 12-month basis and 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 73.4% and 59.2%, respectively.

• • In Q4 2019, the F&B sector saw lower transaction values and a higher number of transactions compared to recent quarters. There were 396 transactions in Q4 which represented a strong reversal of the previous declining quarterly trend. Strategic buyers continue to dominate overall deal activity with financial buyers representing under 12% of all M&A activity in the industry in Q4.

• • The Packaged Foods and Meats category led activity, accounting for nearly 38% of total F&B transaction volume. Restaurant companies proved to be attractive targets as well, comprising over 34% of transaction volume.

• • Based on a representative set of publicly traded companies across the F&B industry, public companies in F&B traded at an average multiple of 16.1x EBITDA and 2.8x revenue. Among the six sectors disclosed in this report, the strongest trading multiples were observed in the Beverage, Ingredients and Restaurant sectors.

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