On the hunt: What makes a good M&A deal?

BACK TO ALL NEWS

On the hunt: What makes a good M&A deal?

21 Apr 2026

Mari Rydings

Mari Rydings is a versatile content creator, editor and marketer with experience developing dynamic, results-driven materials for B2B and B2C audiences. As the editorial director for Avant Food Media, she leads the day-to-day editorial operations for the company’s print and digital magazines, newsletters and social media platforms. Outside of work, she loves reading, hiking, putting together jigsaw puzzles and spending time with her husband and their twin daughters.

KANSAS CITY, MO — After a bit of a lull, food and beverage merger and acquisition (M&A) activity is once again heating up, but the landscape has changed. Macro pressures — geopolitical instability, tariffs, inflation, higher energy costs and volatile commodity pricing — are affecting the cost structures of companies and impacting valuations.

While the number of sealed deals is down, transaction size is up. In 2025, there were more than 16,000 acquisitions, worth a total value of $2.8 trillion. Of those, approximately 150, or 2%, were greater than $1 billion. In the first quarter of 2026, M&A activity reached its highest level of activity in nearly five years, despite a slow start. Economists believe the pace will pick up in the second half of the year as the mid-term elections draw near, inflation cools and the international environment stabilizes.

What type of deal are acquiring companies looking for? Overall, they’re seeking to purchase highly profitable businesses with strong distribution systems, proven innovation initiatives and productive teams. They’re also willing to pay more for higher quality products and larger assets that demonstrate disciplined cost structures and scalable platforms.

“These companies have shareholders and boards of directors asking them to reposition and jettison products and brands that aren’t selling,” explained John Siegler, managing director and head of food, consumer and retail middle market M&A for BMO Capital Markets during the recent Food and Beverage M&A Outlook webinar hosted by The Food Institute. “That causes them to look for innovation, new products and disruptive opportunities, most of which are designed to attract new demographics in larger markets.”

New products and innovation aren’t the only factors driving acquisitions. Investments in technology and supply chain control have companies looking at several strategies for building and aligning their portfolios.

“When you have demographics that shift in how they do things … it’s very important that traditional companies be able to offer products, brands and opportunities to these folks.” — John Siegler | managing director and head of food, consumer and retail middle market M&A | BMO Capital Markets

“M&A is a strong strategic tool that not only supports core businesses, but also grows these businesses,” Siegler said. “When you have demographics that shift in how they do things, both in terms of where they buy, how they buy and what they look for, it’s very important that traditional companies be able to offer products, brands and opportunities to these folks.”

Consumer shopping behavior can significantly impact in M&A deals, too. Right now, certain segments of the population continue dining out and spending money on premium food and beverage items. Others are seeking value and trading down, focusing more on need vs. want. How and where products are positioned to meet the needs of these ever-changing consumer segments can affect valuation.

Food manufacturers who capitalize on trends such as increased interest in clean label, better-for-you foods/healthy living, GLP-1 adoption, and frozen and refrigerated foods are attracting attention from larger companies interested in gaining a foothold in these areas.

Additionally, innovation involving alternative sweeteners, fiber, gut-health solutions, upcycled and regenerative ingredients, and expanded protein options is also driving commercial growth and M&A opportunities.

“Many of the disruptive new brands play into these, and we’ve seen some big acquisitions,” Siegler said. “If you can get a good private equity investment to take your company to the next level, there’s a good chance a CPG is going to buy. The issue is, the hurdles are very high to get that growth capital.”

Brands looking for an infusion of capital can clear those hurdles by clearly articulating their business plan and growth story, building a strong business mix, differentiating their product, and showing robust distribution.

Advertisement

BACK TO ALL NEWS