What's Happening?
In 2025, the consumer and retail sectors experienced a notable shift in dealmaking patterns, characterized by fewer but larger transactions. This trend emerged amidst a backdrop of economic uncertainty
fueled by President Trump's protectionist trade policies. Despite the initial optimism for a business-friendly environment with Trump's return to office, the trade war introduced significant market unpredictability. However, major deals still proceeded, demonstrating resilience in the acquisition landscape. Notable transactions included Capri Holdings' sale of Versace for $1.4 billion, Gildan Activewear's acquisition of Hanesbrands for $2.2 billion, and 3G Capital's $9 billion privatization of Skechers USA. KPMG's analysis highlighted a 4.7% decline in the number of deals in the third quarter compared to the previous quarter, yet the total value of these deals rose by 24.1% to $44.8 billion.
Why It's Important?
The shift towards fewer but larger deals in the consumer and retail sectors reflects strategic adaptations to macroeconomic challenges and trade uncertainties. Companies are increasingly focusing on premium, category-defining assets that promise higher valuations, while divesting underperforming units to generate cash and sharpen portfolio focus. This trend underscores a defensive approach to dealmaking, with private equity firms employing scenario-based underwriting to navigate potential recession impacts. The emphasis on strategic acquisitions and divestitures highlights the industry's efforts to maintain resilience and capitalize on opportunities despite external pressures. The ongoing trade war and its implications for global supply chains further underscore the importance of strategic agility in the face of geopolitical tensions.
What's Next?
Looking ahead, the consumer and retail sectors are expected to continue prioritizing strategic acquisitions and divestitures. Companies will likely focus on acquiring well-known brands with global reach that can benefit from new business models with reduced overhead and inventory risks. The role of brand management companies, such as Authentic Brands Group, is anticipated to grow as they seek to expand their portfolios. Additionally, private equity firms will continue to stress-test recession scenarios and prioritize investments in categories with proven rebound potential. The ongoing trade war and its impact on market dynamics will remain a critical factor influencing dealmaking strategies in the coming year.
