M&A opportunities for the consumer industry

M&A opportunities for the consumer industry

Many retailers were hit hard by COVID-19 and the economic turmoil it created. While some consumer and retail companies have been able to adjust to the current environment, others are looking ahead by considering their M&A options.

In this episode of the Consumer Speaks podcast, Sam Loughry, Deloitte & Touche LLP’s Audit & Assurance Consumer industry leader, is joined by Deloitte & Touche LLP’s Audit & Assurance Private Equity leader, Jason Menghi; Deloitte Consulting LLP’s Private Equity and Alternatives Practice leader, Bhuvanesh Abrol; and Deloitte Consulting LLP M&A principal Pawan Kapoor. They discuss the impact of the current economic situation on deal flow in the consumer industry and how organizations are approaching M&A opportunities.

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Serial and small - M&A strategies that work for consumer products companies

Go back five years. In 2015 we saw a group of just over 200 US consumer products companies that were middle-of-the-road performers (figure 1). As our multiverse framework bears out, they were companies at a crossroads. Fast forward four years. Their fortunes have diverged substantially. About one quarter of them have significantly improved their performance and total shareholder return by enhancing the quality of their business, building their financial resources, or both. In contrast, about 20% have fallen considerably on those same dimensions and are producing negative returns for their shareholders. Some companies, both within and outside the scope of our analysis, met a worse fate—approximately 195 consumer products companies have filed for bankruptcy since January 2019,1 and 40% of these companies have done so in 2020.

Read more on M&A strategies that work for consumer products companies.

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Opportunities for private equity post-COVID-19

The COVID-19 crisis has had a damaging impact on the economy—in a matter of weeks, once-safe assumptions about the economy have evaporated. Government policymakers are racing to pump billions of dollars into small businesses to help keep them from shuttering or laying off workers. The impacts will likely reverberate for months to come.

Read more on opportunities for private equity post-COVID-19.

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About consumer speaks

On the Consumer Speaks accounting and reporting podcast series, you’ll hear from our Deloitte leaders and professionals as they share their experiences and insights on timely topics across the automotive, consumer products, retail, wholesale and distribution, transportation, hospitality, and services industries. Stay informed on the hottest topics facing these industries and how they can affect your business.

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