Aug 3, 2022

M&A Valuations Healthy in Health & Wellness Sector Amid Economic Uncertainty

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Consumers have continued to prioritize preventative nutrition, immunity, and overall health and wellness solutions through the first half of 2022. While the explosive spending levels on consumer health products during the pandemic have moderated, the sector is still forecasted to achieve substantial growth in the coming years. Notably, the North American Dietary Supplements market is expected to reach ~$51.1 billion in 2022, growing at a compound annual rate of 5.6%, according to Grand View Research.1 As business owners and other market participants assess the prospect of a recession, customer retention will be critical for brands to maintain growth. Fortunately for sector players, 79% of U.S. consumers view vitamins and supplements as important to their health, according to ADM.2

Consumer spending has continued to demonstrate resilience amid elevated inflation and an uncertain economic outlook, with personal consumption expenditures rising 0.2% in May from April, according to the U.S. Bureau of Economic Analysis.3 However, the economic outlook among consumers continues to fall, with consumer sentiment declining in June to its lowest recorded value since the survey began in 1978, according to The University of Michigan’s surveys of consumers.4 Sector participants may struggle to add new customers in a recessionary environment, emphasizing the importance of repeat revenue, omnichannel presence, and subscription-based models.

Strategic and investor interest in the Health & Wellness sector continues, although most buyers are approaching acquisitions with more vigilance and highly targeted intent.

Lisa Tolliver Managing Director, Capstone Partners

Year-To-Date M&A Volume Falls Below 2021’s Record Setting Pace

Merger and acquisition (M&A) volume in the first half of 2022 has failed to match the record-setting levels experienced in 2021. Through year-to-date (YTD), 38 transactions have been announced or completed. While this marks a 51% year-over-year (YOY) decrease, it remains in line with historical transaction counts at the midway point of the year. Strategic buyers have comprised the majority of activity, accounting for 81.6% of total transactions, led by private strategic buyers (47.4% of YTD transactions). Public strategics (34.2%) have also shown no signs of slowing acquisition pursuits, paying high multiples for quality businesses that complement product portfolios or expand manufacturing capabilities. However, significant cost inflation has weighed on the profitability of sector players, with the median last-twelve-month (LTM) EBITDA margin among public companies in Capstone’s Supplements Index falling to 14.8% from 16.5% in the previous year. Moving through the second half of the year and into 2023, sector participants will keenly monitor costs and are anticipated to increasingly factor in a potential target company’s expected performance during an economic downturn.

Financial buyers, including private equity firms, have remained active in the sector, accounting for 18.4% of YTD transactions. Many private equity firms have become more selective in their bidding in recent months, largely pursuing strong brands with customer loyalty or manufacturers with a solid client base and high degree of revenue visibility. Notably, contract manufacturers have drawn sustained interest from sponsors, often as add-ons to existing manufacturing platforms. In March, Waterland-backed EMPWR acquired Noble Foods, a private label contract manufacturer of nutritional bars. Terms of the transaction were not disclosed. Previously owned by Novacap Private Equity, Noble Foods provides expertise in producing customized recipes leveraging its coating, layering, and depositing capabilities which can be applied to produce nutritional products including specialist health bars. The transaction highlights how private equity players have actively sought to expand the offerings and geographic reach of their manufacturing holding companies. Additional notable transactions in the sector are outlined below.

  • Nestlé Health Science to Acquire Puravida (May 2022, Undisclosed) - Nestlé Health Science, a subsidiary of Nestlé (SWX:NESN), has agreed to acquire Brazil-based Puravida, a premium nutrition and health lifestyle brand. Terms of the transaction were not disclosed. Founded in 2015, Puravida provides organic, natural, and plant-based foods in addition to clean-label supplements. “Bringing together Puravida's and Nestlé Health Science's deep experience in nutrition research and development will result in further innovation, expanding the breadth and depth of the portfolio across consumer and healthcare professional channels," said Monica Meale, Head of Nestlé Health Science Latam, in a press release.5

The acquisition complements Nestlé Health Science's portfolio, which has an existing offering in oral nutritional supplements, protein powders, and ready-to-drink nutritional beverages in Brazil. In addition, the purchase of Puravida points to an increased focus on plant-based offerings for Nestlé Health Science. Notably, Nestlé Health Science acquired a majority stake in Orgain (February 2022), a leading plant-based nutrition provider (terms of transaction not disclosed).

  • Glanbia Acquires Sterling Technology (May 2022, $60 million) - Glanbia Nutritionals, a business segment of Glanbia (ISE:GL9), has acquired Sterling Technology for an enterprise value of $60 million, equivalent to 2.5x EV/Revenue. Sterling is a leading manufacturer of dairy bioactive solutions derived from bovine colostrum, an ingredient used in immunity and gut health solutions. The acquisition builds on Glanbia's strategy of acquiring and integrating complementary businesses to bolster its Nutritional Solutions business.

"It fits really nicely with our acquisition strategy of adding complementary assets and capabilities to our core platform in Nutritional Solutions. It builds out Nutritional Solutions' immunity offering, which has performed very strongly in recent times, and builds it out across Pediatric, Medical, Dietary and Sports Nutrition categories. It had 2021 revenues of $24 million and will be marginally accretive to our full-year 2022 earnings," commented Siobhán Talbot, Glanbia Managing Director and Executive Director, in a company earnings call.6

Sector M&A Valuations Continue to Outpace Broader Consumer Industry

M&A valuations in the Vitamins & Supplements sector have remained healthy through the first half of 2022, despite economic uncertainty and the likelihood of additional interest rate hikes. Notably, sector purchase multiples have averaged 13.0x EV/EBITDA over the past three years ending Q2 2022. The steady valuation environment can also be seen in the middle market (under $500 million in enterprise value), with Vitamins & Supplements sector multiples averaging 11.7x EV/EBITDA—outperforming the middle market average in the broader Consumer sector of 10.5x EV/EBITDA, according to Capstone Partners.

Rising interest rates may place downward pressure on valuations, particularly among private equity bidders as leveraged transactions become more expensive. Despite higher financing costs, sponsors still have the luxury of vast reserves of dry powder, which have reached $1.4 trillion, according to PitchBook.7 While large-scale leveraged buyouts may decline in the coming months, private equity firms are expected to continue to search for valuable add-on opportunities to existing sector portfolio holdings.

Strategic buyers have continued to pay premiums for high quality assets. Through the first half of 2022, key drivers of premium valuations for target companies have included omnichannel capabilities, subscription-based models, repeat revenue, or robust production capabilities. Jamieson's (TSX:JWEL) acquisition of Nutrawise Health & Beauty in June, outlined below, is reflective of the current transaction environment.

  • Jamieson Wellness to Acquire Nutrawise Health & Beauty (June 2022, $400.2 million) - Jamieson Wellness has agreed to acquire Nutrawise Health & Beauty, owner of youtheory, for an enterprise value of $400.2 million. The enterprise value is inclusive of a contingent consideration of up to $190 million based on the adjusted EBITDA growth of between 0% and 210% by fiscal year 2025. Youtheory's $114 million in revenue and $21 million in adjusted EBITDA (Jamieson Wellness)8 equate to a 3.5x EV/Revenue multiple and 19.1x EV/EBITDA. Absent the contingent consideration, the purchase multiples amount to 1.8x EV/Revenue and 10.1x EV/EBITDA. Through the acquisition, Jamieson gains a leading premium supplement lifestyle brand with product offerings targeting general wellness, beauty, digestive health, joint support, and emotional wellness applications—creating a platform for expansion in the U.S. Vitamins, Minerals, and Supplements market. The transaction is expected to be immediately accretive with 2022 pro forma revenues of $155 million to $159 million, according to a press release.9 In addition, youtheory offers state-of-the-art manufacturing capabilities, with a 150,000 square foot facility, highlighting the value buyers have placed on in-house production.

"The transaction is immediately accretive to Jamieson, and we see significant opportunities for future growth synergies as we leverage our broad product portfolio, best-in-class operational capabilities and global footprint to accelerate youtheory’s expansion across multiple categories and channels in the United States and around the world," commented Mike Pilato, President and CEO of Jamieson Wellness, in the press release.

Moving through the second half of 2022 and beyond, private businesses are likely to be evaluated on their recession resilience and revenue visibility. The past two years have affirmed the emphasis consumers place on health and wellness solutions, specifically vitamins & supplements. Capstone expects consumers to continue to spend on health-conscious products, unwilling to sacrifice healthy routines and the nutritional supplements they have adopted. Notably, 67% of global nutritional supplement users plan to continue using supplements over the next year, according to ADM, creating a sustained backdrop of favorable demand in the Vitamins & Supplements sector.

To discuss the trends above, provide an update on your business, or learn about Capstone's wide range of advisory services and Health & Wellness sector knowledge, please contact Managing Director Lisa Tolliver.


  1. Grand View Research, "North America Dietary Supplements Market Size, Share & Trends Analysis Report By Ingredient, By Form, By Application, By End-user, By Distribution Channel, By Region, And Segment Forecasts, 2021 - 2028,", accessed July 12, 2022.
  2. ADM, "The Dietary Supplement Consumer of Tomorrow,", accessed July 1, 2022.
  3. U.S. Bureau of Economic Analysis, "Personal Income and Outlays, May 2022,", accessed July 10, 2022.
  4. The University of Michigan, "Surveys of Consumers,",
    accessed July 12, 2022.
  5. Nestlé Health Science, " Nestlé Health Science agrees to acquire Puravida,", accessed July 11, 2022.
  6. Glanbia, "Q1 2022 Interim Management Statement,", accessed July 10, 2022.
  7. PitchBook, "Private Fund Strategies Report,",
    accessed July 11, 2022.
  8. Jamieson Wellness, "Jamieson Wellness to Acquire Nutrawise Health and Beauty Corporation Owner of youtheory Brand,", accessed July 11, 2022.
  9. Business Wire, "Jamieson Wellness Inc. to Acquire Nutrawise Health & Beauty Corporation, Owner of youtheory Brand,", accessed July 11, 2022.

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