After a timidly optimistic start to the year, the global M&A market cooled in the first half, conditioned by a highly uncertain economic and geopolitical environment, and is expected to remain challenged in the back half, according to PwC’s mid-year report. Between January and May 2025, the global volume of mergers and acquisitions (M&A) transactions in the consumer sector decreased by 9 percent.
The 9 percent decline was consistent with the trend in overall global M&A volume over the same period.
In the PwC report, Hervé Roesch, global consumer markets deal leader at PwC UK, noted that at the beginning of the year, the market had been cautiously optimistic that consumer space would see a “steady recovery” in deal activity, but persistent inflation, higher-than-expected long-term interest rates, and tariff uncertainty have weakened consumer confidence and investor sentiment. He further said, “The conditions will likely continue to temper M&A activity in the back half.”
“Confronted by a seemingly perpetual cycle of uncertainty, we believe that investors will take a more measured approach for the rest of the year and that caution will remain the name of the game,” said Roesch. “Extended deal timelines have become the norm, underscoring the deliberate pace at which companies are conducting portfolio reviews and reshaping strategies. Moreover, valuation gaps pose a persistent hurdle.”
Roesch added, “We seem to be in a perpetual cycle of uncertainty, and that is weighing heavily on consumer sentiment. As so often in consumer markets, the voice of the consumer will be decisive for the pace and volume of M&A in the coming months.”
Deal Values Spike
On the positive side, PwC, formerly known as PricewaterhouseCoopers, found the value of deals climbed by 32 percent over the five months, thanks mainly to seven deals exceeding $5 billion. Roesch said the success of the few high-profile transactions demonstrate continued confidence in long-term consumer demand and the strategic value of scale.”
PwC forecasts strategic operators will continue to explore portfolio optimization and consolidation opportunities, while the exit opportunities for private equity firms remain challenging.
“Withholding periods for PE-backed consumer portfolio companies remaining high, and with an increasing need for liquidity, we expect this will play out differently depending on the seller, quality of the asset and underlying sector dynamics,” said Roesch. “Among buyers, take-private deals will seize on sustained weakness in public valuations for the sector, and PE operators will focus on bolt-on transactions and on high-quality and longer-term assets. Among sellers, PE firms will continue to evaluate their portfolios for exit opportunities, with quality assets being put up for sale. However, underperforming assets or those directly or indirectly susceptible to tariffs may be held for longer in anticipation of better market conditions, eschewing the increase in PE exits anticipated at the start of the year.”
Sector M&A Performance
Among sectors in the active lifestyle space, PwC noted that activity in the apparel sector is being driven by established brands.
“Active but selective is the phrase we would use to describe the M&A outlook for the apparel sector in the second half of 2025,” said Roesch. “Some recent high-profile deals, such as 3G’s potential acquisition of Skechers, and Authentic Brands’ acquisition of Dockers from Levi’s, highlight how buyer appetite for well-known brands, combined with sellers reevaluating their brand portfolios, will continue to create M&A opportunities in the sector.”
In the retail space, strategic portfolio reviews are expected to continue to drive M&A activity for the broader retail sector, as illustrated by WHSmith’s sale of its high-street book business to UK PE firm Modella Capital in its shift to focus on its international travel retail opportunity. Another example is Dollar Tree’s sale of its Family Dollar business to Brigade Capital Management and Macellum Capital Management as Dollar Tree moves on from an unsuccessful merger.
In the first half of 2025, several public company deals in the retail space were announced, including Dick’s Sporting Goods’ announcement in May 2025 that it agreed to acquire Foot Locker. In the same month, Skechers, with a sizable retail presence, agreed to be acquired by 3G, a New York City-based private equity firm, in a take-private transaction. In March 2025, Sycamore Capital, the PE firm specializing in the consumer space, agreed to acquire pharmacy giant Walgreens Boots Alliance also in a take-private transaction.
“We also expect to see further opportunistic M&A, especially where relatively subdued public company valuations or other market dynamics can create opportunities for transactions,” said Roesch about the retail space. “We believe these trends of consolidation, strategic portfolio reviews and opportunistic take-private moves will continue in 2025 and into 2026.”
Regional M&A Performance
By region, the Americas experienced the largest decline in deal volume in the consumer sector, down 22 percent, in the first five months. Many big deals were getting done with deal values in the Americas region jumping 71 percent. The U.S. had the most deals and the greatest share of deal value in the region, with many of the larger deals involving US companies. While deal volumes in Latin America declined by 4 percent, deal values rose, driven by the announcement of a major port transaction.
In the Asia Pacific region, deal volumes in consumer markets declined by 7 percent, with India standing out by recording a 29 percent increase, compared with declines in other countries. Deal values in the region rose 25 percent, driven primarily by three large supermarket deals announced in Japan, totaling more than $10 billion.
In the Europe, the Middle East, and Africa (EMEA) region, deal volumes and values in the consumer sector declined by 2 percent and 10 percent, respectively, due to macroeconomic and geopolitical conditions, including uncertainty surrounding the outcome of recent U.S. tariff announcements.
M&A Drivers
Depressed stock market valuations, nonetheless, are expected to drive some M&A action in the second half. Roesch said, “Operators present ‘in the market’, with the ability to act decisively, will capitalize on opportunities linked to depressed valuations and distress situations. We expect take-private deals and consolidations will continue to drive significant M&A activity.”
Digital technologies are also fueling strategic M&A activities across the consumer sector, as companies seek to build digital ecosystems that drive growth and gain a competitive advantage. Retail companies are investing in both commercial and operational functions, such as marketing and customer engagement platforms, point-of-sale payment solutions, e-commerce platforms, inventory management and demand planning. Said Roesch, “With technology continuing to reshape all sectors—and especially retail and food—the importance of integrating digital capabilities will be a key component of any value creation thesis underpinning investments in the sector.”
Roesch also expects PE firms to broaden the range of transaction structures to support smaller ventures and minority stakes, thereby extending their reach to “lower risk profile” investments. Possible exit strategies include an initial public offering.
Roesch concluded, “With volatility expected to persist in the foreseeable future, we expect investors to remain selective in a not-so-quiet market. Successful dealmakers will need to combine a strategic mindset with an ability to operate opportunistically.”
Image courtesy PwC
