The ingredients sector is characterised by high R&D expenditure, strict regulation and significant growth potential. The trends towards healthier lifestyles and support on wellbeing are supporting increasing levels op Merger & Acquisition activity.
Innovative companies are being targeted
Large food ingredients companies will continue to target niche suppliers that have a proven track record of innovation in order to expand their product portfolios into high growth segments, such as specialty proteins and probiotics.
Many subsectors are fragmented
There is high potential for consolidation in markets such as proteins, fibres, bakery and savoury ingredients. The health and nutrition ingredient market is currently fragmented and highly attractive to financial and strategic
High multiples are being paid
Acquirers are willing to pay high multiples to access these high growth sectors, since the average EV/EBITDA multiple in our transaction analysis is 17.2x. Key valuation items are the established customer relationships and technological expertise.
Acquisitions are a critical means of accessing this market due to strict local regulations and the necessity for technical expertise.
Listed players are valued at 3.1x Revenue (2021) and 16.7x EBITDA (2021)
A main driver for the high average valuations in the food ingredients market is the EBITDA margin realised by the publicly listed companies.
Sustainability and well-being are key determinants to choose for premium healthier and more conscious food. The food ingredients industry recognises this trend and invests heavily in e.g. protein alternatives. Demand by market leaders for innovative targets is on the rise and M&A activity is picking up the pace.