"In my 40 plus years on Wall Street, I have met regiments of investment bankers. There have been none - i.e., not one - with the combined talent and integrity of Kevin Dunn."
"Dunn's results in guiding the sale of our family business were outstanding in every dimension, from the sale price, the methodology of the sale process and his thoughtful guidance on what may happen post sale. Working with someone who, as they saying goes, has "seen the movie" created a real sense of comfort and instilled confidence that our family's business gem was in trusted hands."
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 have contributed to lower levels of leverage available to buyers, which has produced downward pressure on valuations since late 2008.
Current factors influencing transaction activity in the Consumer & Industrials sector include:
- Rising unemployment and slower growth rates of disposable income have been a burden on financial performance of the sector, which has impacted both the supply and demand of buyers and sellers.
- 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 rebounded somewhat in 2011 to approach their peaks of early 2008, 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 2008, with the average revenue multiple in the sector for Q4 2011 approaching that peak at 1.2x. Average enterprise value / EBITDA (earnings before interest, taxes, depreciation and amortization) multiples for this same period ranged from 5.9x to 9.4x, and the average EBITDA multiple in the sector for the most recent quarter was 7.9x.
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 rebound at a slow pace, as we do not expect credit availability and leverage multiples to improve significantly over the short-term.