Food & Beverage Industry Snapshot Spring 2012
The food and beverage industry has generally benefitted from an improved economy, although many companies are cautious as they face ongoing changes to their businesses. Looking forward, food and beverage companies will continue to encounter rising commodity prices and growing competition, along with challenges arising from heightened consumer expectations. Furthermore, capital gains tax rate changes will likely affect M&A activity if rate increases go into effect as anticipated at the end of 2012. Yet, the food and beverage executives who can navigate through these issues, with a strategic focus on growth, will come out ahead.
Key findings in this report include:
- The number of announced food and beverage deals increased almost 13% from 289 in 2010 to 326 in 2011.
- While there were more M&A deals in 2011 than the previous year, aggregate deal value declined, with median transaction valuations decreasing by 8%.
- On average, public company EBITDA multiples increased from 9.9x in 2010 to 10.2x in 2011.
- Several large food and beverage conglomerates announced plans to break apart into two distinct entities, including Sara Lee Corporation, Ralcorp Holdings, and Kraft Foods Inc.
The Corporate Finance practice of Grant Thornton LLP monitors the key factors affecting the food and beverage industry and focuses on the trends in specific sectors. Their experience with M&A transactions spans several hundred food and beverage industry clients, ranging from global conglomerates to middle-market companies in all sectors of the industry.
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