BOSTON, March 20,
2024 /PRNewswire/ -- Capstone Partners, a leading
middle market investment banking firm, released its 2023
Annual Consumer M&A Report, which shares insights into
public market valuations, the macroeconomic climate, merger and
acquisition (M&A) activity, and an outlook for 2024 industry
activity. With extensive knowledge and transaction experience,
Capstone Partners' Consumer Investment Banking Team provides
unique commentary on 12 key sectors: Apparel, Footwear &
Accessories; Automotive Aftermarket; Beauty; Convenience Stores;
E-Commerce; Food Processing; Food Distribution; Home Goods; Outdoor
Recreation & Enthusiasts; Pet; Sports Technology; and Vitamins
& Supplements.
The discussion of "fortress" balance sheets is often in the
context of leading multinational banks and asset management
institutions. The concept alludes to creating a highly liquid asset
profile that can withstand financial shocks while being able to
deploy capital to fund spending pursuits. In 2023, U.S. consumer
balance sheets were expected to wither under elevated levels of
inflation and a tightened monetary policy environment—however, the
level of excess savings and spending power continued to be
underestimated. Consumers demonstrated a willingness and capacity
to spend on goods and services throughout the year, while market
participants continued to miss the mark on when consumer savings
would be depleted. Notably, personal savings increased 46.4%
year-over-year (YOY), albeit, compared to near historically low
savings levels experienced in 2022. This culminated in Q4 gross
domestic product (GDP) surging past consensus estimates, increasing
3.3% YOY, according to the U.S. Bureau of Economic Analysis.
In 2023, the economy witnessed a substantial shift in spending
that heavily favored the Services segment. Personal consumption
expenditures on services increased 7.4% YOY, over double the YOY
growth experienced by goods spending (3.3%). This marked the widest
difference of services spending growth over goods spending growth
since 2009. Areas such as Recreation Services, Food Services &
Accommodations, and Housing & Utilities Services exceeded
overall growth in services spending. Evidence of this trickled into
M&A markets, with Food-adjacent sectors and the Home Goods
space registering YOY increases in total M&A transaction
volume.
It remains to be seen if the Federal Reserve can start their
victory lap on achieving the heralded soft-landing scenario that
dominated headlines throughout the year. At the conclusion of 2023,
it seems the U.S. economy has avoided the drastic recession that
many market participants had anticipated. Federal funds futures are
no longer overwhelmingly pricing in March rate cuts, but
directionally, there is clear visibility that the economy is
entering an easier monetary policy environment. In the coming
quarters, reported earnings among Consumer players will provide
insight to the demand backdrop and how resilient spending has
remained. In 2024, the labor market, interest rate policy, and the
balance sheets of consumers will remain key aspects of the economy
monitored by business owners, economists, and M&A market
participants.
"For the first time in months the market has visibility over the
direction of interest rates. The cost of money will still be
meaningful, but debt markets are expected to be much more
accommodating over the next six to 12 months than the preceding
period. For privately-owned businesses contemplating a liquidity
event—2024 will bring significant buyer appetite and may usher a
new bull market in Consumer dealmaking," said Capstone's Head of
Consumer Investment Banking Ken Wasik, the lead contributor in the
report.
Also included in this report:
- How M&A volumes and public market valuations in the
Consumer industry fared in 2023.
- Which sectors outperformed the broader Consumer industry and
are poised to garner buyer interest in 2024.
- What trends are driving M&A activity across the Consumer
industry and a breakdown of each of the 12 highlighted
sectors.
To access to full report, click here.
ABOUT CAPSTONE PARTNERS
For over 20 years, the firm has been a trusted advisor to
leading middle market companies, offering a fully integrated range
of investment banking and financial advisory services uniquely
tailored to help owners, investors, and creditors through each
stage of the company's lifecycle. Capstone's services include
M&A advisory, debt and equity placement, corporate
restructuring, special situations, valuation and fairness opinions
and financial advisory services. Headquartered in
Boston, the firm has 175+
professionals in multiple offices across the U.S. With 12 dedicated
industry groups, Capstone delivers sector-specific expertise
through large, cross-functional teams. Capstone is a subsidiary of
Huntington Bancshares Incorporated (NASDAQ: HBAN). For
more information, visit www.capstonepartners.com.
For More Information Contact:
Ken Wasik
Managing Director, Head of Consumer Investment Banking
917-434-6124
kwasik@capstonepartners.com
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SOURCE Capstone Partners