May 6, 2026
By Simon Nolan
Against a backdrop of shifting valuations and renewed deal activity, we brought together leaders from across the Consumer Markets sector at 1 Lombard Street, in collaboration with Spayne Lindsay, to discuss the theme of mergers and acquisitions within the sector.
For some time the consumer market has felt somewhat constrained. While smaller businesses have continued to attract investment from VCTs and Angel investors, the mid-market have struggled to move their assets onwards, and IPO activity has remained subdued for larger, private equity-backed organisations. Whilst there have been a handful of notable larger deals recently (Huel anyone?), transaction activity has generally been slower across consumer.
Consumer businesses continue to face a number of headwinds. The combination of high energy costs, high (and still rising) taxes and persistent inflation - leaving the consumer with less to spend and placing pressure on demand. While some sectors, such as cosmetics, have remained relatively resilient, other larger more discretionary segments are proving more challenging, as people move away from major purchases such as furniture and big-ticket consumer electronics.
Spayne Lindsay highlighted five key “watch out” areas. Understanding how to interpret and navigate these challenges in a tough market is critical.
Market opportunity – small share of a large market or large share of a small one?
Traditionally, the focus has been on dominating a defensible niche and avoiding direct competition with larger, established players. However, what we have actually seen, are many high-growth businesses that are targeting large, relatively stagnant categories. By tapping into existing consumer demand and established usage occasions, these companies are able to scale more rapidly, rather than having to create entirely new markets.
Is one channel or one country enough?
Historically, said the answer may have been yes, provided the business had reached a certain scale in your chose channel and geography. However, the expectation has shifted, and increasingly investors are looking for evidence of international expansion or an omnichannel model. The ability to demonstrate traction in additional markets, or across multiple channels, materially increases both addressable market and growth potential.
There is also a growing view that many UK D2C brands face a natural ceiling operating solely in that channel and potential acquirors of such businesses are keen to see the potential for them to successfully expand beyond their initial market or route to consumer.
How do you identify the right buyers?
Success often comes from understanding where there is a genuine strategic need, while recognising how quickly that can shift. The strongest outcomes are typically achieved when a business identifies a trade buyer (or ideally more than one) for whom the asset is highly strategic.
Positioning the business in line with that need, and creating a sense of competitive tension between buyers, can significantly enhance outcomes.
Preparation, preparation, preparation!
In the world of advanced data analytics, there is nowhere to hide and the days of charming your way through are long gone. When selling to a trade buyer, it is highly likely that the acquirer will have access to more data and sharper insight on your business than you do. Facing up to any potential issues early and addressing them well in advance of a process, can make a material difference to both outcome and valuation
Exit strategy - What are you trying to achieve?
The fundamental question is whether the objective is to achieve a specific valuation, or to maximise value in the context of market conditions. Many processes fall short due to unrealistic expectations, often set early by advisers or sellers, creating an expectation gap that becomes impossible to bridge.
It is not uncommon for businesses or owners to walk away in the heat of the moment at a critical point during a process. Yet, six months on, the issues that you could have been prepared to walk away from at the time often prove far less significant in hindsight.
Ultimately, the market will turn, and consumer M&A will return to favour - as it always does. However, the fundamentals remain unchanged. The businesses best positioned for success will be those that are clear on their strategy, well-prepared, and aligned to the right buyers, regardless of where the market sits in the cycle.