Consumer Products M&A Continued to Rebound in 2Q, Direct-to-Consumer Companies Led the Way

Consumer M&A deal volume in North America during 2Q 2021 was up over 80% compared to the same period last year, when the impact of COVID caused a significant slowdown in activity. Investors are now making up for lost time, and mergers and acquisitions deal volume is back on par with the strong levels of 2018 and 2019. We expect deal activity to remain strong through 2022.

Source: Cap IQ

A significant portion of consumer products M&A deals in the second quarter involved acquisitions of direct-to-consumer companies. DTC deals included Unilever’s acquisitions of Paula’s Choice and The Carlye Group’s acquisition of Beautycounter. DTC indie brands that received growth capital included Athena Club, Act+Acre, Let's Disco, and more. A growing number of e-commerce aggregators also acquired DTC or Amazon brands, and online marketplace company Faire raised $260 million.

Given the surge in online purchases over the past year, acquirers and investors have predictably focused on digitally native brands with strong capabilities in online customer acquisition, conversion, and retention.

M&A activity has surged back to pre-COVID levels, but most deal activity has been concentrated in either big acquisitions by strategic buyers, or growth capital for small DTC brands. So far, a relatively limited number of mid-sized deals have closed post-COVID. This is largely due to limited supply of strong mid-sized deals on the market, not a lack of interest from buyers. Many owners of mid-sized brands have been completely focused on managing their businesses through COVID, and are just beginning the process to consider a sale. We expect to see more mid-sized deals announced moving forward, as companies currently on the market announce transactions, and as founders who are considering an exit start the process to sell.

Valuations are generally strong, but  companies that experienced a significant increase in sales during COVID present some unique issues. Sellers generally hope to capture valuations that reflect their recent growth. But buyers want reassurance that revenue growth will be sustainable in a post-COVID environment. While an earn-out or other variable structure may help address potential differences in valuation opinions, some buyers and sellers are taking a wait-and-see approach. Some sellers are waiting to put their businesses on the market until they can demonstrate strong ongoing sales in 2021. Expect to see some of these businesses come onto the market in late 4Q or early 2022.

We expect consumer products M&A to continue to gain traction as sellers adapt to the post-COVID business environment, recognize the current appetite by buyers, and seek to sell before potential tax hikes in 2022.


Strong buyer demand and a positive environment can help drive the success of an M&A transaction. But as always, the best way to sell any business is to understand your goals, priorities, and options; prepare for the sale process; and execute an organized M&A process designed to obtain offers from qualified buyers.

Select United States Beauty and Personal Care Acquisitions in 2Q 2021  


Select Capital Raises in 2Q 2021

 Source: Cap IQ and others


See our article on 1Q 2021 M&A here.  

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About Hughes Klaiber

Hughes Klaiber is an investment banking firm based in New York City. We help clients turn a desire to exit their business into a successful sale that meets their personal and financial goals. If you are considering a sale of your business, please give us a call. We would be happy to share our insight into the current M&A market, learn more about your business, and discuss how we may be able to assist you. Schedule an introductory call here.

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