GCG’s Q3 2021 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:
- Q3 2021 saw additional gains in the Food & Beverage (“F&B”) industry and the broader U.S. equity market as equities advanced Q2’s recovery from the COVID-19 pandemic. The Restaurants segment was the strongest performing in Q3 2021 as the outlook for the sector improved due to strong earnings and positive news regarding COVID-19 booster vaccines. The F&B industry underperformed the broader market except for the Restaurants segment.
- In Q3 2021, the F&B sector saw fewer transactions and higher average deal value than in Q2 2021. There were 406 transactions in Q3 with an average deal value of $62.7 million. Strategic buyers continue to dominate overall deal activity, while financial buyers have grown their presence due to favorable industry trends, historical levels of dry powder, and a push to get deals done before potentially unfavorable changes to the capital gains tax rate.
- The Packaged Foods and Meats category led activity, accounting for 40% of total F&B transaction volume. Restaurant companies proved to be attractive targets as well, comprising nearly 24% 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 17.3x EBITDA and 2.9x revenue. The strongest trading multiples were observed in the Ingredients, Beverage, and Restaurant sectors
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