Food and beverage M&A deal activity in the U.S. and Canada returned to pre-COVID-19 levels in Q1 2021, with 327 deals closing over the trailing 12 month (TTM) period ending March 31, 2021. Transaction volumes in Q1 2021 were on par with the previous year, with 94 deals closing over both periods. Q1 2021 also tied Q1 2020 for the strongest first-quarter deal count on record for the food and beverage space.
M&A activity in the food and beverage sector over the TTM period ending March 31, 2021 is still predominately driven by strategic buyers (including companies primarily owned by private equity investors), with strategic transactions representing 82% of total deal value. Of the 327 deals closed over TTM Q1 2021, 265 (81%) were completed by privately owned buyers.
On the pandemic front, COVID-19 vaccination programs continue to roll out across North America, giving consumers, buyers and investors increasing visibility of a return to normalcy. With U.S. vaccination rates faring particularly well, battered sectors like restaurants, hospitality and tourism are cautiously re-opening, providing a welcome demand boost to food and beverage businesses that supply those end markets. These improving trends support a strong outlook for M&A activity for the remainder of 2021, particularly when combined with robust cash on the balance sheets of strategic buyers and SPACs, private equity funds with ample capital and attractive borrowing costs from financial institutions.