Capstone Headwaters Reports: Pandemic Increases Demand for Tactical Goods and At-Home Gaming Products

November 3, 2020

Boston, MA – Capstone Headwaters released its Outdoor Recreation & Enthusiasts update, reporting that COVID-19 lockdowns and social distancing protocols have driven consumers to increasingly pursue recreation and leisure activities, contributing to heightened demand for outdoor, sporting goods, and tactical product manufacturers.  The pandemic has also introduced a new wave of consumers into the Outdoor Recreation & Enthusiasts industry as individuals seek new forms of outdoor and indoor entertainment amid lockdowns and social distancing rules.  As a result, demand has surged for tactical goods and gaming applications, with industry players recording strong revenue growth.

“Overall M&A activity slowed in the sector during the early stages of the pandemic as companies adapted to a new environment with increasingly remote workforces and e-commerce.  Many companies focused on internal operations to meet a surge in demand for products in Q2 and Q3 as consumer preferences evolved.  However, tactical products and outdoor recreation companies have continued to draw robust buyer interest through the pandemic,” said Managing Director Sophea Chau.

“As strategic buyers and private equity groups continue to analyze the growth and change in consumer demand and trends in the sector, they are increasingly focused on tuck-in and add-on acquisitions to complement their targeted business mix and portfolio diversification in the sector.  We expect a significant increase of M&A activity in the market in 2021 after a tactical pause in 2020,” said Director Peter Bailey.

M&A activity has slowed through year-to-date (YTD) 2020 with 132 transactions announced or completed compared to 140 transactions in YTD 2019. As the pandemic intensified through the end of Q1 and into Q2, industry participants focused on internal operations, preserving cash flows, and drawing down on credit facilities to provide ample liquidity.  Strategics have comprised the majority of deal activity at 77.3% while private equity has accounted for 22.7%, predominantly pursuing add-on acquisitions

To access the full report, click here

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Capstone Headwaters is one of the largest and most active independent investment banking firms in the United States.  The firm has a rich 15+ year history of achieving extraordinary results for middle market entrepreneurs, business owners, investors, and creditors.  Capstone offers a fully integrated suite of corporate finance services, including merger & acquisition, debt & equity placement, corporate restructuring, valuation & fairness opinion, financial advisory, and ESOP advisory services.  Headquartered in Boston, the firm has 150+ professionals across 16 offices in the U.S., with and an international presence including over 450 professionals in 40 countries. With 16 dedicated industry groups, the firm delivers sector-specific expertise through large, cross-functional teams on a global basis.  Capstone has been named “U.S. Middle Market Investment Bank of the Year” for the past 9 consecutive years and is consistently recognized as one of the top investment banking firms to work for. For more information, visit www.capstoneheadwaters.com.

For More Information Contact the Key Report Contributors:

Kenneth Wasik
Managing Director, Head of Consumer & Retail
917-434-6124
kwasik@capstoneheadwaters.com

Sophea Chau
Managing Director, Outdoor Recreation & Enthusiasts
617-619-3307
schau@capstoneheadwaters.com

Peter Bailey
Director, Tactical & Sporting Technology
310-740-3286
pbailey@capstoneheadwaters.com

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