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Behind the Buyouts: Solomon's Leonhardt on Consumer M&A Resurgence

Published: October 17th, 2023
Solomon co-head of consumer and retail Cathy Leonhardt discusses the choppy consumer M&A market and the busy subsectors still catching investor attention.

On the latest episode of The Deal’s Behind the Buyouts podcast, Solomon Partners co-head of consumer and retail Cathy Leonhardt talks about the sector’s slow start to M&A this year, categories that continue to shine and potential signs of a resurgence in dealmaking.

Inflation, supply chain disruptions and the rising cost of debt stopped consumer companies in their tracks last year. Direct-to-consumer businesses, darlings of the investor community in 2021, saw their techlike valuations plummet.

But some subsectors, such as beauty, fragrance, residential services and medical spas, remained active as risk-off investors shifted deal activity toward categories they view as less discretionary, according to Leonhardt.

Public markets, however, have been tepid, with the much-awaited IPO of L Catterton Management Ltd. portfolio company Birkenstock GmbH & Co. KG having an underwhelming start. Still, more brands such as Skims and Reformation considering stock market debuts is cause for optimism, Leonhardt said.

“As the economic outlook stabilizes and the [Federal Reserve] moderates some of its [rate hikes], that will drive more transaction activity,” she said. “We do think some of the transactions that may have launched in 2022 will start to get done in the back half of 2023.”

Listen to the episode with Cathy Leonhardt below:

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