Signs of Hope in Private Equity Consumer Investing?

Is a turnaround afoot in consumer and retail investing? It may be too early to tell, but two recent trends offer encouraging signs.

While megadeals—investments valued at over $1 billion—fell sharply for much of 2022 and 2023, there’s been a notable uptick in big-ticket activity over the past 12 months. The first six months of this year have seen these deals double over the same period a year ago. Megacap funds have been particularly aggressive in pursuing these scale deals, highlighted by Roark Capital’s $9.6 billion investment in Subway earlier this year. A potential Sanofi transaction (reportedly valued at around $17 billion) could punctuate this trend as we close out 2024.

On the other end of the spectrum, a decade-long trend toward platform building continued to grow, especially in the consumer services subsector. While numerous, these add-on deals trend toward the smaller size—more than 80% were valued at $50 million or below in the first half of 2024.

The consumer services segment saw the lion’s share of overall activity in consumer and retail investing, grabbing 45% of total deal count through the first half of the year—nearly double from its share five years ago—with a vast majority (75%) of those deals being of the add-on variety.