Food companies remain attractive acquisition targets

The food industry remains a stable sector. And that stability continues to attract buyers. Not only because of scale benefits or access to new products, but also because major investments are becoming heavier to carry. As a result, buyers with significant financial strength increasingly come into view.

Growing market, shifting demand

Nearly a quarter of the Netherlands’ industrial production value in 2025 will come from food. That’s substantial. ABN AMRO expects a volume increase of 1.5 percent in 2025; the years after that will move at a slower pace, with growth of 0.5 and 1 percent. Meanwhile, domestic demand has risen due to higher purchasing power, especially in supermarkets. Some product groups, however, are facing a tougher market. Beef, chocolate, and coffee feel the pressure of sharp price increases. And although exports remained positive — even with trade barriers — the bank anticipates food inflation to normalize next year. That will temper demand somewhat. Not until 2027 is a renewed uptick expected.

Family businesses reach their limits

The sector is capital-intensive. Automation, robotics — everything requires scale and money. That makes succession within family businesses increasingly difficult. Those who want to keep the company in the family often rely on the DSR or BOR, sometimes supplemented with a subordinated loan. Others record arrangements in family statutes or use a STAK structure to separate control and profit distribution.

At the same time, small and medium-sized companies remain appealing to buyers. Of the roughly 370 mergers and acquisitions per year in the food industry in Northwest Europe since 2021, strategic buyers were involved in about two thirds of the transactions. Private equity participated in the remainder. A quarter of the acquisition targets generated less than 50 million euros in revenue. That alone shows how broad the interest is.

Acquisition processes put pressure on entrepreneurs

Selling a company may sound straightforward, but it rarely is. An information memorandum must be prepared first, then buyers are approached, followed by due diligence. Only after that does a deal come into sight. Buy-and-build strategies are common, as seen with Group of Butchers and Signature Foods, which expanded in recent years through targeted acquisitions.

For management, this is an intense period. Smaller companies often lack detailed information on margins, pricing, and volume developments per product or production site. At the same time, valuations regularly clash: sellers expect a different figure than buyers are willing to pay. Emotion and culture also play a role — especially in family businesses and certainly when foreign buyers are involved.

Preparation starts long before a sale

Before you even discuss a potential sale, a company must be clear about where its value lies. In scalable private-label production? Or in the strength of the brand? The stage of growth also matters: startup, scale-up, or further along. What counts as well is how solid the business plan and financial model are — something companies should ideally develop years before selling becomes a consideration. Support programs can help, and in some cases, a temporary CEO is appointed to guide the process.

Abnamro.nl