Consumer M&A Market Sees Delayed Rebound with Optimistic Outlook for 2026

Delayed Rebound in Consumer M&A Market Revealed by Capstone Partners

In a compelling report released by Capstone Partners, a prominent middle market investment banking firm, an analysis of the consumer mergers and acquisitions (M&A) market elaborates on a stalled rebound, yet offers a cautiously optimistic outlook for 2026. The report casts a spotlight on factors influencing public market valuations, macroeconomic conditions, and M&A activity within the consumer sector, revealing that while 2025 was marred by market uncertainties, signs of recovery are beginning to surface.

Current Market Dynamics

In 2025, the consumer M&A market experienced a substantial decline of 18.9% year-over-year (YOY), a downturn that followed consecutive years of decreases in 2022 and 2023 and only moderate growth in 2024. Major contributors to this decline included a significant drop in private equity (PE) deal-making and a notable contraction in public strategic acquisitions, which collectively hindered overall market performance. The report indicates that the appetite among public buyers has weakened, leading to a decrease in valuations, with the median EV/EBITDA multiple falling to 9.2x in 2025—the lowest since Capstone began collecting this data a decade ago.

Positive Indicators for 2026

Despite the challenges, Capstone highlights several encouraging signs that suggest potential recovery for the consumer M&A market. One significant finding is the burgeoning number of acquisitions valued over $250 million, which constituted 30.6% of all disclosed consumer M&A deals in 2025. Historically, high proportions of large deals have preceded wider M&A activity resurgence, evidenced by trends observed from 2016 to 2025.

Moreover, certain discretionary sectors within the market have displayed notable M&A growth, such as Tactical Products, Outdoor Recreation Enthusiasts, and Vitamins & Supplements, with increases of 54.3%, 47.7%, and 30% YOY, respectively. The willingness of acquirers to re-enter the discretionary segments indicates a belief that economic risks have become more manageable and demand levels have stabilized.

The Role of Private Equity

The report also sheds light on recent trends in private equity activity, indicating a remarkable month-over-month growth of 29.4% in add-on acquisitions for December 2025. This surge paints a picture of a robust environment for PE firms, with a growing necessity to monetize aging portfolios while meeting the demands of limited partners (LPs). If current exit rates remain consistent, the backlog of portfolio companies that are four years or older will take significant time to clear unless a faster pace of exits is established.

Industry Expert Insights

Ken Wasik, head of investment banking at Capstone, expresses the firm’s expectations for an initial M&A rebound, particularly from larger deals that can negotiate the intricacies of market uncertainty effectively. As several discretionary sectors begin to show early signs of recovery, a broader market rally for consumer M&A in 2026 seems plausible, especially as private equity firms remain eager to engage with transforming market conditions.

Conclusion

Capstone Partners' Annual Consumer M&A Report presents a complex, yet hopeful narrative for the consumer industry moving into 2026. While 2025 posed numerous challenges, the growth in select sectors, along with the ongoing activity in larger cap deals, suggests that the groundwork for recovery is being laid. The full report delivers a comprehensive overview of these developments, providing vital insights for stakeholders navigating the consumer M&A landscape. For a complete understanding of the trends, valuation drivers, and expectations for 2026, interested parties are encouraged to review the complete analysis from Capstone Partners.