Consumer

Advisers who understand your sector

Large consumer companies continue to look at acquisitions as a source of innovation and to access brands which appeal to younger more dynamic audiences. Increasingly their focus is on acquiring mission-led consumer brands with a focus on a quality/premium offering, aspriation-led product purchasing, health and lifestyle, millennials, sustainability and transparency. They are prepared to take risks to provide quicker routes to market and higher growth.

How much are companies worth in the Consumer sector?

The following 3 graphs will give private business owners a broad indication of the value of their business:

1. The Enterprise Value to EBITDA* multiples on which comparable listed companies are trading

Consumer graph 1 - reversed-1


At the end of H1 2019, the global, all market average Enterprise Value to EBITDA* multiple for listed consumer companies was 16.6x. This was greater than the previous six months and up on the previous year, when listed consumer companies were trading on a multiple of 15.7x. Within the consumer sector, trading multiples varied between 14.5x and 18.7x across the range of sub-sectors. Smaller businesses generally traded on lower multiples.

* EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation
† Note, the Enterprise Value to EBITDA multiples above are for listed businesses, and it is generally the case that privately owned businesses are valued at a discount. Listed company data was accurate at 01/07/19

2. The multiple of EBITDA paid by acquirers of comparable businesses

Consumer graph 2 - reversed v2


The average multiple of EBITDA paid globally in consumer transactions has declined slightly over the past few years. It currently stands at 11.0x. When reviewing these multiples we break out businesses in the range $5-150m, as they tend to have unique attributes which affect their valuation. Smaller businesses have generally been sold on lower multiples.

3. The volume of M&A transactions and acquisitions

Consumer graph 3 reversed


In H1 2019, there were 2,576 transactions globally in the consumer sector. This is slightly up on the preceding 6 months, when there were 2,493 transactions. Although slightly declining since 2016 H2, the high number in the last 6 months suggests demand for consumer businesses remains fairly buoyant.

 

For further information as to how these valuations and statistics are computed, and their impact on your transaction, please contact us.

Key consumer market updates:

1

Health conscious consumers

As consumers are becoming more health conscious, there has been an explosion in the vegan, organic, gluten free and healthy food markets. With food product markets heavily dominated by a few large firms, M&A activity in the consumer food industry has the potential to exhibit significant growth in the second half of 2019.

2

More demand for customisation

Although already a key area, there has been increased consumer demand for a unique and personalised customer experience. This has been seen through more choice around individual product customisation, choices of available service or a bespoke buying process.

3

Consumer sector embracing cutting edge

Although the consumer industry has historically not been tech centric, the changing market means that companies are being forced to develop a significant online presence and increase the efficiency of their business practices with cutting edge data analysis and cloud technology. The introduction of direct to consumer brands and pop-up stores has the potential to disrupt.

4

Investment into changing shopping patterns

With the changing nature of how consumers are shopping, significant investment has been made into self-scanning at supermarkets, checkout-less brick and mortar shopping through the likes of Amazon and click and collect. 

5

AI streamlining influencer advertising

Instagram influencers continue to play a major role in the advertising space for consumer products despite talks of regulation. A number of firms are looking to change the way social media influencers and suitably matched companies can be connected through the use of AI platforms.

6

Brand values matter

Corporate companies are looking to better manage their portfolios to align with consumer trends and the changing social landscape. More and more consumer businesses are employing social message advertising campaigns. This comes as Unilever CEO stated, “we’ll dispose of brands that don’t stand for something”.

Data sources compiled by Corbett Keeling