2025 M&A trends in the consumer products industry

Mergers and acquisitions (M&A) in the consumer products space have always been guided by evolving consumer preferences, economic conditions, and industry dynamics. Recently, this sector has been shaped by rising interest rates, the ongoing cost-of-living crisis, and changing consumer behaviours. These factors have created a complex yet opportunity-rich environment for dealmakers. Drawing insights from Frank Dunne, Consulting Partner at RSM in Ireland, and Eric Fougedoire, Partner – Corporate Finance at RSM in France, we explore the latest developments, challenges, and future directions for M&A in the consumer products industry.

Recent activity in consumer products M&A

The first half of 2025 has been characterised by stabilised, albeit selective, M&A activity in the consumer products sector. “We are continuing to see strong interest in premium, category-leading brands with scalable, export-ready prospects,” says Dunne. “I have seen opportunities are strongest in premium food, wellness, and specialist household products, with buyers prioritising brands with strong equity, route-to-market control, and the ability to scale, whether through retail, international expansion or hybrid models.” This reflects a broader European trend, where companies are favouring premium and category-leading brands for acquisition opportunities.

According to Fougedoire, the push for acquisitions is largely driven by “the limited organic growth faced by a vast majority of players has led them to favour external growth initiatives.” Well-capitalised corporate buyers continue to dominate, leveraging strong balance sheets to fund M&A deals. Gradually, private equity (PE) players are emerging selectively, says Fougedoire, adding that “private equity mostly performs cautious add-on acquisitions on existing platforms to complete diversification on selected products, distribution channels or geographical targets.”

Additionally, the due diligence process in 2025 has become more granular, reflecting the complexities of the industry. Dunne explains that “Buyers want visibility over the most recent trading period and expect robust forecasts with clear commercial assumptions.” This adds pressure on sellers to be exceptionally prepared while extending deal timelines.

Emerging technologies play a vital role in streamlining diligence. Fougedoire shares that “Data analytics allows firms to design a central, independent base-case for investments, enabling more informed and strategic decision-making.” Despite these advancements, the duration of due diligence has increased significantly, often extending to 12–16 months. This prolonged timeline is largely driven by underwhelming or inconsistent current trading performance and weak cash conversion, with quarterly results remaining inconsistent and inefficient.

Key challenges for dealmakers

The road to a successful deal in 2025 is fraught with challenges. A consistent hurdle, that is seen across many industries, is valuation alignment. Dunne explains, “Valuation alignment remains a recurring challenge, particularly where historic trading performance is not viewed as a full indicator of future potential.” Buyers are becoming more disciplined, prioritising businesses with clear growth levers, margin stability, and strong underlying economics.

This sentiment is echoed by Fougedoire, who notes that “the alignment of sellers’ expected prices based on multiples and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) after Covid remains a significant issue.” Other challenges include fluctuating trading performances and a high-interest-rate environment, both adding layers of complexity to negotiations.

Geopolitical uncertainty also looms large, with Dunne emphasising that deep and focused due diligence has become critical, noting that “Across the board, diligence has deepened, particularly around working capital dynamics and underlying profitability.” Sellers, too, must invest in robust preparations to ensure they are ‘exit-ready’ for increasingly selective buyers.

Navigating the cost-of-living crisis

The cost-of-living crisis has continued into 2025, further shaping consumer spending habits, creating ripple effects across the M&A landscape. Fougedoire observes a growing polarisation between budget and luxury markets, pointing out that “Budget-conscious consumers are prioritising essentials and private-label products, while wealthier individuals maintain or increase their expenditure on premium goods.”

Interestingly, this dynamic has given rise to a new market within consumer products with the increased momentum in ‘accessible premium’ offerings becoming increasingly popular. “Consumers are backing brands that deliver quality, purpose, or functional benefit, even as overall spend becomes more considered,” Dunne explains. This segment of the market is proving resilient due to its ability to combine perceived value and quality with affordability.

Subsectors like food, cosmetics, and household goods are responding to these shifts through targeted innovation. For example, Dunne notes that “In food and wellness, there is a focus on functional benefits and clean labels. Meanwhile, in cosmetics and household goods, supply chain resilience and sustainability remain strong differentiators.” Organisations are fine-tuning their pricing strategies while leaning into innovations that align with consumer expectations for quality, ethics, and convenience.

Changing consumer behaviour and M&A impacts

Consumer preferences are continuously shaping the M&A landscape, with experiential elements becoming increasingly important. Brand authenticity is key, with Dunne stating, “Consumers increasingly value authenticity and connection — whether through brand narrative, personalised engagement, or in-store experience.” For businesses, this means investing in loyalty, content, and community-building initiatives to deepen customer relationships.

The ‘experience economy’, driven by social media and shifting cultural norms, has amplified the attractiveness of experiential retail. Fougedoire remarks, “Brands are transforming physical stores into experiential hubs, offering immersive environments that engage all senses and foster community.” Such transformations have made consumer businesses with unique experience-driven strategies attractive M&A targets.

Additionally, the rise of D2C (direct-to-consumer) and e-commerce models has influenced deal activity. According to Dunne, while the initial D2C boom has normalised, “Digitally native brands remain attractive where customer acquisition economics are proven and logistics are under control.” Buyers increasingly value integrated digital capabilities for their ability to strengthen engagement and retention.

The role of private equity

Private equity’s growing influence is felt across almost all industries, retail and consumer products is no different. “Functional food and drink, health-related personal care, and sustainable packaging remain active areas for PE investment, with investors prioritising authenticity and strong economics,” says Dunne.

Fougedoire highlights a trend in bolt-on acquisitions. “Companies are favouring smaller, strategic deals that complement existing operations, allowing firms to expand capabilities and market reach,” he explains. These deals often focus on adding value to existing portfolios in cost-efficient ways.

Earnout mechanisms have become instrumental in bridging valuation gaps in PE deals, especially in a market characterised by caution and shifting performance metrics. Dunne explains, “These are being tied more tightly to clear metrics, often accompanied by governance mechanisms to avoid post-deal ambiguity.”

Looking ahead

Looking to the next six months and beyond, M&A activity is not expected to drastically change. Dunne states, “We expect steady mid-market activity, with continued demand for high-quality, brand-led businesses. Buyers are selective, but where the fundamentals are strong – and the brand resonates with consumers – we are seeing real conviction.”

Fougedoire offers a similarly measured outlook: “M&A activity should remain similar to first half of FY25.” He notes that while the overall market is cautious, value-driven deals and bolt-on acquisitions will continue to play a significant role.

As Dunne observes, “Ultimately, buyer engagement is driven by the quality and resilience of the business – with significant value hinging on early preparation and careful positioning to ensure sellers are truly exit-ready.” This highlights the importance for companies to stay agile, focus on clear value propositions, and invest in readiness as the sector continues navigating economic and consumer shifts.

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