Betting on the consumer comeback

There was a shopping spree in the consumer and retail (C&R) M&A market in 2021. A total of 3,135 deals involving U.S.-based C&R companies were announced—up 33.5 percent from 2020 and nearly matching the level in pre-COVID-19 2019. Total deal value soared to $225 billion, an increase of 40.7 percent over the previous year. (See the charts below for more)

C&R deal making was driven by a couple of trends gaining momentum since the COVID-19 recession of mid-2020: accelerated digitization to reach online customers and rising demand for health and wellness products and services.

In 2021, other notable C&R trends included:

• Private equity firms, with over $2 trillion in dry powder, were the most active buyers
• In retail, the number of deals for e-commerce properties more than doubled, as strategics beefed up online capabilities
• Companies continued to optimize portfolios, divesting slow growers and acquiring growth vehicles

Looking ahead to 2022, the upward trajectory is likely to continue. According to a recent KPMG survey of C&R executives, 60 percent said they expect to increase their transactions in the coming year. But high valuations and a possible shift in consumer spending—away from purchasing goods toward re-engaging in social activities—could make deal-making more complicated for many firms.