PE Sidelined in Consumer M&A


October 16, 2014

Strategic buyers are driving the dynamism in the consumer goods M&A market, which makes it tough for private equity firms to compete, according to analysis published by IFR and Merrill DataSite. Global M&A in the consumer products and services sector is up by 60% to USD 77 bn in the first three quarters this year, compared to the same period last year, not including a USD 25 bn merger between tobacco companies Lorillard and RJ Reynolds.


The research notes that the private equity industry is benefitting from buoyant IPO markets on the sell-side, but on the buy-side they’ve been “left to press their noses up against the window of consumer M&A”. Unlike retail, fewer consumer goods companies are owned by financial sponsors because it is a sector where strategic buyers often have an edge in terms of synergies, which is a way of saying that strategic buyers can and will pay more for such assets. The article said that bankers expect the current trend to continue. (Image source: Merrill DataSite)

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