Consumer Products

Mergers and acquisitions will play a pivotal role in the growth of consumer products companies in 2009. Domestic markets are growing slowly and companies are hesitant to raise prices in a softened economy that finds millions of people unemployed.

The consumer products industry has grown about 7 percent a year over the past five years due to mergers and acquisitions, emerging markets and product innovation. In 2009, M&A deals will be the primary way that firms continue that growth. Companies with the capital to acquire smaller, cash-strapped firms should be able to work through the current economic downturn as they enter new markets. Firms with solid cash positions also will be able to renegotiate supply deals and hold down prices.

Global consumer product companies will find potential acquisition targets cheaper in both developed and developing markets, allowing them to secure market positions in time for an economic recovery. Periods of economic downturn are often good times for companies to create value from mergers and acquisitions since they are likely acquiring companies at lower earnings multiples.

Sources
12th Annual PricewaterhouseCoopers Global CEO Survey: Consumer Goods.
Deloitte 2009 Industry Outlook: Consumer Products.