Consumer Markets – Food and Agricultural

The Consumer sector is comprised of staple goods and services. Companies in this sector tend to be less sensitive to economic cycles. Companies in this sector include manufacturers and distributors of food, beverages and tobacco, and producers of non-durable household goods and personal products. The economic outlook for the U.S. in this sector has improved despite concerns of a near-term recession. During periods of volatility in the overall market, this sector has remained relatively calm. Companies deal with tight profit margins to a large degree, primarily due to aggressive cost-cutting measures.

 

Value of Closed Domestic M&A Transactions ($mm)

 

Sector Performance vs. National GDP

The U.S. Consumer sector experienced a decline in Mergers and Acquisitions (M&A) activity during the first quarter of 2016, with deal volume and value decreasing during the quarter compared to first quarter of 2015 and first quarter of 2015, according to the first quarter of 2016. But regardless of the slow quarter, consumer deal activity has been strong. That said, several trends support the forecast that 2016 deal making will be on par with 2015. High liquidity in the markets remains for most companies with ongoing near-zero U.S. interest rates and cost of capital remaining low for the right borrowers—investment-grade companies. Another trend cited is that corporate executives will continue looking to M&A for earnings per share growth, as other levers appear limited due to modest organic growth opportunities and exhausted share buyback programs.

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