United States

Consumer products and services industry poised for a breakout

2Q 2015 Consumer Products and Services Industry Spotlight


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Growth in the U.S. consumer products and services (B2C) industry has lagged recently, despite low gas prices and rising consumer confidence. Expectations of a spending bump failed to materialize in the first quarter. Even so, the B2C space may be poised for a breakout. Despite a less-than-impressive first quarter, the industry is in a good position in the business cycle, and we should see an upswing in overall activity and demand.

Related to M&A activity, $39.4 billion worth of B2C deals were completed in the first quarter, the highest quarterly total since the $47.6 billion spent in Q2 2014. While aggregate value totals have crept back up over the last three quarters, deal flow has fallen. That's likely a result of the competitive and frothy deal environment in the industry. Finding deal flow is challenging, particularly a good deal with a great brand, and multiples are still very high.

Private equity deal flow remains strong in the B2C industry. Another $32.1 billion was invested in the first quarter through 139 deals. Total value hit its highest point since Q2 2013. Despite today's high multiples, private equity investors are willing to paying more for the deal if they can foresee a successful return on investment.


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