Food & Agriculture M&A Update – July 2023

Moderating Food Inflation Offers Relief for Sector Players, Food & Agriculture M&A Shows Signs of Acceleration

Capstone’s latest Food & Agriculture M&A Update reports that sector players are eyeing a return to a more normalized operating environment as disinflation in food prices and easing of supply chain disruptions encourage optimism for margin recovery. In June, year-over-year food inflation hit its lowest level since October 2021, and it’s starting to alleviate persistent margin pressure the sector’s grappled with since the onset of the COVID-19 pandemic.

M&A activity in the sector has shown signs of acceleration despite uncertainty in deal markets. Year-to-date, sector M&A volume is up 7.7% as companies pursue inorganic growth for synergies, scale, and new channels. As commodity costs moderate, dealmaking has steadily increased, with the second quarter recording the highest volume since Q4 2021. The growing transaction volume points to improved optimism and opportunities for sellers to achieve favorable exits.

Also included in this report:

• How the elevated cost environment has driven a divergence in the market between value and premium brands.
• Commentary on the recent acceleration of sector M&A activity and current drivers of premium valuations.
• The qualities acquirers are currently prioritizing—and rewarding—in acquisition targets.
• Insights and commentary from Capstone’s senior bankers on recent notable transactions and sector trends.

Capstone Partners’ Consumer Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the consumer and retail industries. Our team partners with leading mid-to-large sized Food & Agriculture businesses that serve growing end-markets. For more information on Food & Agriculture M&A trends featured in this report or to speak with one of our Consumer Investment Banking Team members about how to grow, value, and/or sell your company, we are here to help. Contact us today to start a conversation.