No Match Found
As we move into 2024, many consumer-facing companies seem to be taking a “wait and see” approach to pursuing impactful capital market transactions. One reason may be that they are unsure what effect the Fed's recent anti-inflationary policies will have on consumers and consumer-facing companies. Against this backdrop of economic uncertainty, we have seen deal market activity contract throughout 2023 by about 20% versus 2022, with active dealmakers being forced to get creative and use tools such as earnouts and private credit to close valuation gaps.
Despite the current economic climate, consumer-facing companies cannot become complacent. To remain competitive amid shifting consumer trends brought on (or accelerated) by COVID-19, changing demographics and the ever-present forces of transformative technologies such as artificial intelligence, operators in the consumer space need to reinvent their business models. Strategic M&A activity presents companies with an opportunity to meet these challenges by accelerating their reinvention.
To execute successful M&A in 2024, dealmakers will be required to develop value creation plans at the onset, use effective screening and diligence capabilities to identify the right targets, and then act decisively to seize opportunities. By doing so, companies can use a period of broad uncertainty to create separation between themselves and their competitors while also developing a platform for success if M&A and capital markets rebound to levels seen in 2021 and 2022.
“Despite a slower 2023, we believe deals are a strategic imperative for consumer market companies and 2024 will bring increased deal activity and new opportunities for value creation for both companies and consumers alike.”