"I had never been involved in the sale of a business before, let alone my own. I hired Dunn Rush & Co. to assist me through the process because of their extensive experience helping similar business owners. Kevin and Greg prepared us well for the task, anticipated events and issues, negotiated hard and delivered superb results. They know what they are doing and do it well!"
"When our investment principals were ready to market our organization, Greg and his team generated plenty of interest so we had multiple offers from which to choose. It was indeed a pleasure to be working with a strong, professional team while getting the personal attention of a partner throughout the process."
Consumer & Industrial
- Food & Beverage
- Retail
- Travel & Leisure
- Personal & Household Products
- Manufacturing & Distribution
- Materials & Specialty Chemicals
- Packaging
Consumer & Industrial companies continue to see interest from strategic and private equity buyers in several key sectors. Tight credit markets over the past few years have begun to ease, particularly for larger transactions, and volumes and valuations have improved modestly since 2008.
Current factors influencing transaction activity in the Consumer & Industrials sector include:
- Continuing high levels of unemployment and slower growth rates of disposable income have been a burden on financial performance of the sector.
- Strong interest in non-cyclical and counter-cyclical sectors such as discount retail and grocery, as financial performance in these types of businesses out-paces other industries during difficult economic conditions.
- When difficult business conditions make organic growth difficult, many companies seek growth through acquisitions.
- Many Consumer & Industrial companies have generated liquidity or de-levered by accessing the value of company-owned real estate through sale-leaseback transactions.
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Sub-sectors within this space that rely more heavily on discretionary spending are more challenged in this market, such as consumer durables and restaurants.
The number of transactions in the Consumer & Industrial sector have continued to improve steadily over recent quarters, despite the slow economic recovery and wavering consumer confidence that has challenged this sector for the past several years.
In terms of valuations, quarterly average enterprise value / revenue multiples have ranged from 0.7x to 1.4x since the beginning of 2009, with the average revenue multiple in the sector for Q1 2012 remaining fairly stable near that peak at 1.2x. Average enterprise value / EBITDA (earnings before interest, taxes, depreciation and amortization) multiples for this same period ranged from 6.0x to 9.4x, and the average EBITDA multiple in the sector for the most recent quarter was 8.5x.
As the economy continues its slow recovery, consumer demand and spending will drive improving operating performance for the entire supply chain of goods and services – manufacturing, distribution and retail all benefit from increasing consumer confidence. We expect activity and valuations in the Consumer & Industrial sector to continue to rebound at a modest pace, assisted by slowly recovering levels of credit availability and moderate increases in leverage multiples.