Small is the New Strategic

The consumer market has experienced dramatic shifts in mergers and acquisitions (M&A) activity over the last decade.

August 27, 2025 • Estimated Reading Time: 7 minutes

From Mega-Deals to Smart Plays: The New Face of Consumer M&A in 2025

As we navigate through 2025, macroeconomic headwinds, evolving consumer preferences, and corporate realignment have reshaped deal-making behavior. The strategic priorities of companies have transitioned from aggressive expansion to focused portfolio optimization, with divestitures and targeted acquisitions taking center stage.

In this article, we analyze three key trends in the consumer products and retail sectors using the latest data from Bain, Dealogic, PwC, and LSEG. We also explore what this evolving M&A landscape means for private investors looking to deploy capital in consumer markets.

I. Shrinking Strategic Deal Values in Consumer Products

Over the last decade, consumer product companies have seen volatile swings in strategic deal values. Following a peak of $349 billion in 2015, deal values have steadily declined, bottoming out at $79 billion in 2020 during the height of the COVID-19 pandemic.

Although there was a modest rebound in 2021 and 2023, the recovery has been inconsistent. 2024 marks another downturn, with deal values falling to $121 billion, down 19% from 2023. According to Bain’s article on Consumer Products M&A, this softening reflects reduced appetite for mega-deals, prolonged regulatory scrutiny, and increased economic uncertainty. Companies are now more cautious, prioritizing value creation through strategic realignment over aggressive expansion.

While the dollar value of deals has declined, this doesn’t indicate a lack of activity. Instead, it signals a shift toward smaller, more targeted transactions focused on brand rationalization and portfolio transformation.

II. The Rise of Divestitures: A Structural Shift in M&A Strategy

A standout trend in the consumer products M&A space is the increasing role of divestitures. From 2014 to 2018, divestitures accounted for 37% of total deal value. This figure surged to 47% between 2019 and 2023 — a 27% increase in share.

This shift is driven by several converging forces:

  • Pressure to streamline portfolios: Multinationals are shedding non-core or underperforming brands to focus on high-growth, high-margin categories.

  • Inflation and capital constraints: With tightening interest rates, companies are raising capital through divestitures to fund innovation and digital transformation.

  • ESG and consumer sentiment: Sustainability considerations are pushing firms to offload brands that conflict with their ESG mandates or values-driven customer bases.

Bain reports that strategic buyers are placing higher emphasis on value accretive divestitures, often selling off slow-growth legacy assets to private equity buyers who see transformation potential.

For investors, this trend signals a growing pipeline of acquisition-ready businesses — particularly in niche or premium segments where brand repositioning or digital scaling can unlock significant upside.

III. Retail M&A: Declining Deal Volumes and Values

Retail M&A has been similarly affected by macroeconomic pressures. According to PwC and LSEG, retail deal volumes peaked in 2H21 at nearly $2.7 trillion and have since declined 40.12% to around $1.6 trillion in 1H25.

Key contributing factors include:

  • Valuation mismatches between buyers and sellers

  • Interest rate hikes that make financing leveraged buyouts more expensive

  • A shift from traditional retail to digital-first models, forcing legacy retailers to reassess strategic fit before pursuing deals

Interestingly, PwC notes that while overall volume is down, strategic consolidation is up. There is increased interest in tuck-in acquisitions and vertical integration, especially in e-commerce logistics, supply chain automation, and customer data platforms. These deals are often smaller in size but rich in synergies.

Private equity is also playing a more active role in retail take-private transactions, especially in undervalued or underperforming public companies. The PwC article highlights that portfolio reviews and carve-outs are expected to remain strong throughout 2025.

IV. M&A Strategy in 2025: From Scale to Focus

What’s clear from the data is that M&A strategy in 2025 is less about buying scale and more about acquiring strategic value.

Key Themes:

  1. Portfolio Optimization over Expansion
    Gone are the days when conglomerates pursued massive acquisitions to drive top-line growth. Today, the emphasis is on selling non-core assets and acquiring high-performing, strategically aligned businesses.

  2. Surge in Divestitures
    Divestitures are no longer a defensive move. Instead, they are a proactive tool for corporate repositioning. Sellers are becoming more disciplined, often running competitive processes to maximize deal value.

  3. Private Equity’s Expanding Role
    With corporates retreating from high-value M&A, private equity firms are stepping in to acquire divested assets, often adding operational capabilities or growth capital to boost performance. The rise in take-private activity also points to renewed PE interest in undervalued public assets.

  4. Valuation Discipline and Capital Efficiency
    Higher cost of capital is leading both strategics and financial sponsors to be more selective. Buyers are seeking clear value creation opportunities and synergies, avoiding speculative or high-multiple transactions.

  5. Digital and ESG Integration
    Digital transformation and ESG mandates are driving both acquisitions and divestitures. Brands that align with sustainability, health & wellness, or digital enablement are commanding premium multiples.

Bottom Line for Private Investors

The 2025 consumer M&A landscape is shaped by moderation, focus, and strategic realignment. For private investors, this environment offers rich opportunities — but only for those who understand where the value lies.

Here’s what matters most:

  • Follow the divestiture trail: Many divested brands are profitable but under-optimized. With focused leadership and digital scaling, these assets can yield strong returns.

  • Look for "platform-ready" assets: Consumer companies with fragmented operations, untapped D2C potential, or minimal digital presence are ripe for transformation.

  • Prioritize categories in flux: Health & wellness, sustainability, and experiential consumption are leading categories where innovation is driving consumer loyalty and growth.

  • Partner with strategics: As corporations narrow their focus, co-investing in carve-outs or enabling add-ons for existing platforms can be mutually beneficial.

  • Don’t chase size—chase synergy: In a capital-constrained world, efficient deployment and operational know-how outweigh scale.

In summary, 2025 may not be a year of record-breaking deal value, but it’s unquestionably a year of value-rich opportunities for investors with clear theses, operational depth, and sector foresight.

Sources & References

Bain. (2025). M&A in Consumer Products: Carving Out to Grow. https://www.bain.com/insights/consumer-products-m-and-a-report-2025/