The US consumer market is expected to experience a significant surge in mergers and acquisitions (M&A) in 2025, following a volatile election year. This resurgence is driven by executives seeking inorganic growth strategies to combat price stagnation and weaker consumer demand.
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According to a PwC report analyzing S&P Capital IQ data, consumer market deal activity increased by 4% in the latter half of 2024, contrasting with a 4% decline in the first half. This upward trend is projected to continue into 2025, with Q4 2024 already showing increased deal volume.
Renewed Focus on M&A for Growth and Innovation
“M&A has always been crucial for growth and innovation in this sector,” explains Mike Ross, PwC’s US consumer markets deals leader. “We’re witnessing a resurgence, a return to normalcy.” This renewed focus on M&A is evident across various consumer sectors, including footwear.
The footwear industry saw a notable increase in deal activity in the second half of 2024. Key examples include RG Barry Corporation’s acquisition by Marubeni Growth Capital US in June and JD Sports Fashion’s acquisition of Hibbett Sports in July. More recently, Steve Madden acquired the ATM apparel brand in December, Vida Shoes International acquired Aquatalia in September, and Bluestar Alliance acquired Off-White from LVMH in September.
Private Equity’s Role in the M&A Surge
Ross attributes the surge in activity partly to private equity groups holding assets longer than usual due to market conditions. Now, a favorable US market is prompting increased deal-making. “They’re under growing pressure from investors to generate liquidity,” says Ross. “Combined with other positive indicators, this fuels my optimism for increased activity leading into 2025.”
Companies Preparing for Strategic Acquisitions
Throughout the latter half of 2024, many of Ross’s clients in the consumer sector focused on becoming “deal ready.” This involved portfolio reviews, balance sheet analysis, and identifying categories suitable for inorganic growth through M&A. While smaller deals are prevalent, larger transactions like the Saks and Neiman Marcus merger remain possible. In smaller deals, there’s a greater emphasis on aligning the acquired asset with the company’s long-term objectives.
Focus on Preserving Value and “Secret Sauce”
“Companies are dedicating more time to preserving the acquired company’s ‘secret sauce,’ vital in the consumer space,” Ross explains. “The focus is on creating and preserving value, not just absorbing the company into the existing M&A machinery.” In the footwear sector, emerging direct-to-consumer (DTC) and socially successful brands are attractive targets for larger companies and private equity firms.
Opportunities for Emerging Brands
“Significant capital and specialized expertise reside within mid-market private equity firms, enabling them to successfully guide early-stage brands through this competitive landscape,” Ross observes. This suggests a fertile ground for emerging footwear brands to leverage M&A for accelerated growth. The convergence of factors like pent-up private equity activity, companies seeking inorganic growth, and a focus on strategic acquisitions positions the US consumer market for a robust M&A surge in 2025.
Conclusion: A Dynamic Landscape for Consumer Market M&A
The US consumer market is primed for a significant increase in M&A activity in 2025. Driven by a confluence of economic factors and strategic considerations, companies are actively seeking opportunities for inorganic growth. This dynamic landscape presents both challenges and opportunities for businesses across various consumer sectors, including footwear. As companies prepare for potential acquisitions and private equity seeks to deploy capital, the consumer market promises to be a focal point for deal-making in the coming year.
