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Launching on December 16, 2025
Pre-register for the US Deals 2026 outlook
A more measured approach to dealmaking
The first half of 2025 has brought a more selective lens to deal activity, as companies sharpen their focus on long-term value amid evolving consumer dynamics. After a relatively confident first quarter, consumers showed signs of caution in April, particularly in high-ticket and discretionary categories driven by rising prices including tariff-related cost pass-throughs. Recent earnings calls across consumer packaged goods (CPG) and retail reflect this story with executives citing a more value-conscious consumer.
Even with ongoing uncertainty around tariffs, rising costs and shifting consumer demand, companies are still doing deals — they're just being more careful about which ones. Most of the activity so far this year came from large consumer companies looking to add brands to reach new consumers. Private equity (PE) firms are also making moves, notably through take-private transactions where they see an opportunity to invest in companies with brands they believe can weather current conditions or where value can be unlocked through private restructuring.
What we’ve seen so far in 2025:
- Fewer deals happened in the first quarter, but a handful of larger acquisitions from corporate and PE buyers drove up value.
- Large consumer companies continue to lead deal activity, especially in food, beverage and personal care products.
- Retailers have been under pressure, with falling returns and lower valuations driving some to consider selling parts of their business.
- PE is active, with fewer deals but larger investments overall despite higher borrowing costs and extended holding periods.
- Many companies are looking to sell off non-core assets to focus on what they do best, but political and economic realities have raised hurdles to getting deals signed.
- Cross-border deals are down due to tariff uncertainty, with a shift toward more domestic activity for now.
- A number of public consumer companies, many in retail, were trading at various discounts during the first and second quarters compared to 2024 creating potential take-private opportunities. However, the window may be short depending on market volatility. Since late 2024, roughly half of the public companies in consumer staples and discretionary categories have improved their cash and leverage positions. On average, large-cap and retail players have strengthened their balance sheets more than their CPG and restaurant peers — potentially positioning themselves for more active M&A consideration in the second half of 2025.
Note: The source used in the 2025 midyear outlook is S&P Global Market Intelligence.
What to expect for the rest of the year
Looking ahead, dealmaking isn’t going away — it’s just becoming more selective with longer process cycles. Barring any near-term definitive resolution to the tariff situation, some companies are thinking twice before making big moves. But there’s still plenty of interest in deals that help companies grow, refocus or build new capabilities in response to slowing growth and margin pressure.
We expect more companies to rethink their portfolios, selling off what’s not working and doubling down on areas with strong potential. For CPG companies, analysts at the Consumer Analyst Group of New York (CAGNY) conference in February focused on portfolio rationalization even more than in recent years. Retailers will also need to make tough choices if they want to improve their performance or attract new investors.
Here’s what to watch for in the second half of 2025:
- Portfolio reviews: For big CPGs and retail houses, we expect even more scrutiny of portfolios to understand which brands and categories are creating value and which are distracting management and draining resources. Multiple CPGs have publicly announced such reviews this year.
- Divestitures: These portfolio reviews could result in more divestitures to free up focus and cash, although a valuation reset between sellers and buyers may be needed based on challenges with recent processes. Alternative structures such as joint ventures and earnouts may continue to be used to share risk.
- Acquisitions: Larger companies will continue looking to acquire brands aligned with consumer trends — particularly with food and beverage as well as personal care brands that blend health and wellness into their value proposition.
- Cross-border deals: As future trade expectations become less volatile, we expect companies to look at cross-border acquisitions to mitigate tariff impacts and gain access to new consumers.
- Restructuring: A pullback by consumers in certain subsectors such as retail and restaurants may further expose challenged companies and attract interest from PE players with turnaround experience.
- Technology: Cross-industry acquisitions and tech-enabled advances continue to influence M&A with the GenAI race going beyond Silicon Valley as consumer companies have moved past experimentation to using AI as a proven business accelerator.
“Consumer dealmaking isn’t going away. It’s just highly selective in the current environment — cautious but not quiet.”
Mike Ross,US Consumer Deals LeaderThe bottom line
Dealmaking is still happening in the consumer space — just more carefully. Given the growth and margin headwinds across both staples and discretionary categories, the focus now is on making smart, strategic portfolio choices that will pay off in the long run as emerging trade deals provide clarity on new economic realities.
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