Boston, MA – Capstone Headwaters released its August 2020 Food & Beverage Report today, reporting robust activity from January through March, outpacing 2019 volumes by nearly 15%. However, deal activity significantly slowed starting in April and is now down 10.6% through July. Strategic sellers and buyers as well as PE firms immediately refocused on internal operations and risk mitigation, addressing liquidity and operational concerns. Concurrently, lending conditions substantially tightened, with leverage multiples decreasing one to two turns in late March, according to Capstone’s Debt Advisory Group. June and July deal activity rebounded and ended the months above 2019 levels as well capitalized buyers that have performed stronger relative to their peers seek opportunistic acquisitions of distressed businesses.
Capstone maintains relationships with an extensive private equity network, which gives us access to unique buyer perspectives and industry insights. We spoke with many of these private equity firms in Q2 to learn more about the current state of the Distribution environment and COVID-19’s unprecedented impact on their respective distribution businesses. The impact to food distributors has been significantly dependent on end markets served and management’s agility in the face of the unprecedented shock. Distributors serving institutional customers (e.g. education, corrections facilities, healthcare and food banks), along with those serving the grocery channel, have largely proven to be resilient and performed better than their peers. Meanwhile, distributors that serve Restaurants, Hospitality, and Tourism markets have experienced unprecedented sales declines amid lockdowns, resulting in an abundance of excess inventory that had to be thrown away or distributed to alternative channels.
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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 18+ year history of achieving extraordinary results for middle market entrepreneurs, business owners, investors, and creditors. The firm offers a fully integrated suite of corporate finance services, including merger & acquisition, debt & equity placement, ESOP advisory, corporate restructuring, valuation & fairness opinion, and financial advisory services. Headquartered in Boston, Capstone Headwaters has over 170 professionals across 17 offices in the U.S. with 16 dedicated industry groups. Capstone has been recognized consistently as one of the top investment banks to work for and “U.S. Middle Market Firm of the Year.” For more information, visit www.capstoneheadwaters.com.
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