US Consumer Deal Market Set to Pick Up in 2025, PwC Report Finds

The consumer deal market in the US is expected to experience a resurgence in 2025, according to a recent report by PwC. As the economy recovers and consumer confidence improves, companies are poised to engage in strategic mergers and acquisitions (M&A) to optimize their portfolios and adapt to changing consumer preferences. This article explores the key findings of the PwC report and the potential implications for investors.

The PwC report highlights several consumer subsectors that are expected to experience the highest deal volumes and values in 2025. These include grocery retail, food and beverage, sustainability and recyclability, fashion, pet ownership and spending, consumer health, hospitality and leisure, and the Middle East transportation and logistics sector. Companies in these subsectors are likely to pursue consolidation, broaden access to consumers, and invest in sustainable practices to stay competitive in the evolving market landscape.

The economic recovery and consumer confidence are expected to drive M&A activity in these subsectors. As consumers regain purchasing power, they will seek products and services that cater to their evolving needs and preferences, creating opportunities for strategic acquisitions. For instance, the health and wellbeing subsector is poised for growth as consumers prioritize self-care and preventive health measures. Similarly, the hospitality and leisure sector is expected to rebound as consumers resume travel and seek experiences.

The cost of capital and interest rates play a significant role in consumer deal valuations. Higher interest rates and valuation gaps have led to delayed exits within private equity portfolios, particularly in food and beverage and household and personal products subsectors. As interest rates remain high, further distress and insolvencies in consumer markets are expected, driving more distressed M&A opportunities. However, experienced dealmakers can still realize value despite the slowdown, potentially through smaller tuck-in acquisitions or complex structures like joint ventures, earnouts, or vendors' loans.

In conclusion, the US consumer deal market is expected to pick up in 2025, driven by an economic recovery and increased consumer confidence. Companies in various subsectors are likely to engage in strategic M&A to optimize their portfolios and adapt to changing consumer preferences. Investors should pay close attention to these trends and consider allocating capital to companies that are well-positioned to benefit from the resurgence in consumer deal activity.