GCG’s Q4 2020 Food & Beverage Industry 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 2020 saw additional gains in the Food & Beverage (“F&B”) industry and the broader U.S. equity market as equities further advanced Q3’s recovery from the COVID-19 pandemic. The Restaurants segment was the strongest performing in Q4 2020 as the future outlook for the sector improved due to the progress made with multiple COVID-19 vaccine candidates. For the 3-year period ending December 31, 2020, the S&P 500 index was up by 39.3%, extending its run from Q3. The F&B industry underperformed the broader market with the exception of the Restaurants and Beverage segments.
- In Q4 2020, the F&B sector saw a greater number of transactions and significantly higher average deal value than in Q3 2020. There were 395 transactions in Q4 with an average deal value of $197.1 million. Strategic buyers continue to dominate overall deal activity and have sought acquisitions to offset slowing organic growth and to diversify their offerings. In Q4, financial buyers represented under 14% of all M&A activity in the industry.
- The Packaged Foods and Meats category led activity, accounting for 33.6% of total F&B transaction volume. Restaurant companies proved to be attractive targets as well, comprising over 27% 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 16.3x EBITDA and 3.0x revenue. Among the sectors disclosed on the previous page, the strongest trading multiples were observed in the Beverage and Restaurant sectors. The overall industry experienced an increase in EBITDA and revenue multiples of 9.3% and 7.1%, respectively, in Q4 2020 due to the continued growth following Q1’s decline caused by the onset of COVID-19.
Click here for the full update.