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Middle market M&A deals quarterly: consumer goods

Nov 05, 2021 blog featured image

Thoughts on mergers & acquisitions in the consumer products industry

INSIGHT ARTICLE  | 

Authored by RSM US LLP

Each quarter RSM’s industry senior analysts and mergers and acquisitions professionals provide a glimpse into the consumer products deal environment. In this article, we feature deal activity through Q3 2021 within the consumer goods sector.

In 2021 consumer goods companies have faced several macroeconomic challenges affecting operations, including:

  • Supply chain disruptions for materials and finished goods from abroad
  • All-time high container rates on oceanic shipping
  • Cost increases on raw materials
  • Labor shortages and rising wage rates

As companies work to navigate these challenges, closed transactions in Q3 2021, based on information from PitchBook Data Inc., fell to the lowest level since Q2 2020, when uncertainty surrounding the COVID-19 pandemic resulted in a temporary pause in deal activity.

Businesses that completed successful transactions have demonstrated an ability to protect margins, maintain strong consumer connectivity, and expand delivery offerings to consumers through e-commerce or omnichannel platforms. Certain sub-industries—including the robust pet-product segment—are also benefiting from the transition to a hybrid work model as consumers spend discretionary dollars on home needs and renovations. The ability to sell direct to consumers is perhaps most evident in the beauty and personal care sub-segment, which continues to be a focus of strategic acquirers.

Illustrative deals that closed during Q3 2021

July:

Herman Miller acquired Knoll Inc.

  • Herman Miller completed the acquisition of Knoll Inc. in July; Knoll sells home and office furnishings. Upon completion of the acquisition, Herman Miller rebranded to MillerKnoll.

August:

H&H Group acquired Zesty Paws

  • H&H Group acquired Zesty Paws in August; Zesty Paws is a leader in the pet supplement channel.

BDT Capital Partners acquired Culligan International

  • BDT Capital Partners acquired Culligan International in August; Culligan is a leader in water softeners and filtration systems for residential and business.

Unilever acquired Paula’s Choice

  • Unilever acquired Paula’s Choice in August; Paula’s Choice is a leading provider of beauty products distributed through e-commerce and retail chains.

September:

Platinum Equity acquired Petmate

  • Platinum Equity acquired Petmate in September; Petmate manufactures a variety of pet products sold through both retail and e-commerce channels.

 

Looking forward

Entering the fourth quarter, we expect both strategic and financial buyers to continue to be active in the consumer goods space, evidenced by the more than $1.5 trillion in dry powder amassed through private equity fundraising. Consumer goods companies, especially those that continue to demonstrate the ability to perform in today’s challenging landscape and cater to subsectors amid a post-pandemic rebound, will be attractive to investors.


This article was written by Mike Graziano, Tom Martin, Ryan Schloer, Kunal Bhatt and originally appeared on 2021-10-18.
2021 RSM US LLP. All rights reserved.
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