Banker Insights: 2025 Natural Products Expo West Takeaways

Natural Products Expo West 2025

Expo West 2025 continues its long history of showcasing the latest innovations in natural and organic foods, beverages, and supplements, as well as beauty, personal care and home products.

The Hexagon Capital Alliance team is optimistic about the broader Food & Beverage ecosystem after several days on the floor dialoguing with clients and prospects, strategic and financial acquirers, and industry peers and colleagues.

Let’s take a closer look at some of our Consumer and Industrial teams’ most notable exhibitors:

Notable Exhibitors at the Show:

North Hall Highlights
  • ALOHA – The provider of plant-based protein bars and powders is a new addition to Bain & Company’s annual list of Insurgent Brands.
  • Chomps – Having received an $80 million investment from Stride Consumer Partners in 2022, the FL-based maker of meat sticks continues to experience explosive growth and is inspiring a new wave of meat snack brands.
  • Flair Flexible Packaging – Privately held and family-owned for 30+ years and boasting six vertically-integrated facilities across the U.S., Canada, Mexico, and South Korea.
  • Revere Flexpak – Privately held and owned by the Revere family, our neighbors in the Pacific Northwest, where the fourth generation is continuing the family’s specialty and custom packaging history.
Hall A Highlights
  • Glanbia Nutritionals – The global nutrition company boasts a strong balance sheet and is well positioned for additional M&A following its Foodarom and Flavor Producers acquisitions.
  • Graphic Packaging – Logical strategic acquirer in paper packaging; high bar for M&A targets competing with other capital allocation priorities (i.e. share buybacks, dividends, capex, etc.)
  • Pack Plus Converting – A local Southern California company providing flexible packaging products for various consumer sectors featuring digital & rotogravure printing and paper & poly solutions.
Hall B Highlights
  • Commercial Bakeries – Acquired by Graham Partners in 2023, the Canada-based producer of private label cookies recently acquired OH-based Imagine Baking.
  • Irresistible Foods Group – The family of brands led by King’s Hawaiian is actively seeking authentic “perimeter” brands to add to its growing portfolio.
  • Fortis Solutions – Serial acquirer under the tutelage of private equity sponsors, the company is a proven packaging powerhouse and industry mainstay.
Hall C Highlights
  • Bluegrass Ingredients – With new backing from TA Associates, the KY-based supplier of R&D-focused ingredients solutions is poised for both organic and M&A growth.
  • TricorBraun – Highly acquisitive in rigid packaging distribution; don’t count them out in flexible packaging solutions either.
  • Traco Packaging and YEBO – Both were recapitalized by private equity sponsors in 2021 and 2023, respectively; seeking add-on acquisitions.
  • Innovative Packaging Solutions – A family-owned business in Southern California providing flexible packaging solutions to leading, global brands.
Hall D Highlights
  • Bitchin’ Sauce – Fresh off landing a Starbucks account, the CA-based dip maker’s booth was constantly buzzing with new product offerings.
  • Reliance Vitamin – The NJ-based company highlights a sizeable group of Vitamins, Minerals & Nutritional Supplements contract manufacturing exhibitors, a sector currently seeing strong private equity interest.
  • K-1 Packaging – Leading, multi-substrate packaging supplier headquartered in Southern California.
Hall E Highlights
  • Legendary Foods – Former Quest Nutrition founder’s latest venture capitalizes on snacking trends with protein-packed, nostalgic snacks.
  • Yaxin Flexible Packaging – Family-owned business with offices in Southern California and production facilities across Asia.
Networking and Industry Events:

Beyond the high-energy trade show floor, Expo West 2025 offered vibrant networking opportunities with companies hosting well-attended networking and post-show events. Special thanks to Sheppard Mullin and HCVT for an evening filled with good company and energetic laughter.

For more information or questions, please contact our team:

Andrew Suen, Managing Director: asuen@hexagoncapitalalliance.com

Johnny Sherwood, Director: jsherwood@hexagoncapitalalliance.com

Gallagher Pediatric Therapy

Hexagon Capital Alliance is pleased to announce that it has served as exclusive financial advisor to Therapy for Kids, Inc. (dba “Gallagher Pediatric Therapy”) in its sale to The Stepping Stones Group, a portfolio company of Leonard Green & Partners. 

Gallagher Pediatric Therapy, headquartered in Fullerton, CA, is one of the leading educationally based providers of pediatric therapy services in Southern California.   Founded in 1988 by Mary Kay Gallagher and Gene Riddle, as a California Non-Public Agency, the Company employs occupational and physical therapists to serve children throughout most of the school districts in Los Angeles and Orange County. 

The Stepping Stones Group is a premier, national provider of therapeutic, behavioral, autism, nursing and educational services to children in school, home and community settings. 

“The Hexagon Capital team demonstrated a keen understanding of our business and provided us with guidance throughout every step of the process,” said Mary Kay Gallagher, Founder and Chief Executive Officer of Gallagher Pediatric Therapy.  “They brought multiple interested parties to the table, and ultimately it was clear that The Stepping Stones Group was the right partner for our company.”

Paul Kacik, Managing Director and Head of Healthcare Investment Banking at Hexagon Capital Alliance, stated, “Gallagher Pediatric Therapy is one of the largest and most respected NPAs providing educationally based PT/OT services in Southern California.  When Hexagon’s healthcare investment banking team was given the opportunity to assist Mary Kay and Gene on this important next step in the company’s evolution, we jumped at the chance.  We look forward to watching the company continue to provide best in class pediatric therapy under the Stepping Stones banner.”

For additional information, please contact a member of the deal team:

Paul Kacik, Managing Director – [email protected] 

Brad Erhart, Director – [email protected] 

Dylan Bell, Associate – [email protected] 

Market Monitor: Online Retail

Market Monitor: Online Retail

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Market Monitor: Online Retail

Making the right decisions for your business starts with having the most accurate and current information available. Our Online Retail Market Monitor keeps you up to date on the events, trends, and market forces that shape and guide the industry.

U.S. Online Holiday Sales See Strong Growth with 8.7% YoY Increase in 2024

U.S. online holiday sales surged by 8.7% year-over-year (YoY) in 2024, marking the largest growth since 2020. This increase was driven by consumer demand for higher-ticket items, such as sporting goods, appliances, and electronics, with the availability of substantial discounts throughout the shopping season.

Key Holiday Shopping Stats for 2024

  • Mobile Shopping Dominates: Around 55% of purchases during the 2024 holiday season were made via smartphones, underscoring the growing importance of mobile commerce.
  • Top-Selling Categories: Electronics, apparel, and furniture & home goods together accounted for over half of the holiday sales, with each category seeing YoY growth between 7%-10%.
  • Personalized Shopping Experiences: The use of artificial intelligence (AI) and algorithms significantly increased in 2024. Retailers created hyper-personalized shopping experiences, similar to how streaming platforms recommend content. This shift resulted in higher customer satisfaction and loyalty, with 52% of consumers preferring personalized offers based on their data.

M&A Activity and Future Outlook

Mergers and acquisitions (M&A) activity remained steady from 2023 to 2024, with just under 100 deals reported annually. However, as we move into 2025, M&A activity is expected to rise due to a more favorable regulatory environment, increased investor confidence, and hundreds of billions of dollars in uncommitted capital.

For more information or questions, please contact our contributors:

Rich Anderson, Managing Director: [email protected]

Tyler Dale, Managing Director: [email protected]

Johnny Sherwood, Director: [email protected]

 

Market Monitor: Personal Care

Market Monitor: Personal Care

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Market Monitor: Personal Care

Strong Rebound and Growing Opportunities

After a slower 2023, U.S. Personal Care M&A activity rebounded sharply in 2024, with 55 closed transactions, marking a 49% increase over the previous year. A significant portion of these deals was driven by private equity, signaling positive trends for the broader M&A market. Looking ahead, the outlook for 2025 remains strong, driven by several key factors.

Strong Growth in Beauty Care Transactions

  • Beauty Care: Transactions in the beauty care sector nearly doubled in 2024, reflecting the sector’s resilience.
  • Market Drivers: The easing of inflation and declining interest rates are benefiting the consumer discretionary sector.
  • Notable Deals:
    • Helen of Troy’s acquisition of Olive & June (nail care brand).
    • TSG Consumer’s investment in Summer Fridays (premium skincare brand).

Increase in Vitamins, Minerals & Nutritional Supplements M&A

  • Growing Market: M&A activity in the vitamins, minerals, and nutritional supplements sector increased in 2024.
  • Consumer Trends: 75% of American adults now regularly use dietary supplements, according to a recent survey.
  • Private Equity Activity: Notable private equity-backed add-on acquisitions of contract manufacturers, including:
    • Somafina (Heartwood Partners) acquiring UST.
    • Impetus Wellness Group (AEA Investors) acquiring Reliance Vitamin Company.

Factors Driving a Strong M&A Market in 2025

Hexagon Capital Alliance identifies several factors contributing to a favorable M&A environment for 2025:

  • Post-Election Certainty: Greater political and economic clarity.
  • Easing Regulatory Scrutiny: Potential for looser regulatory oversight in the financial sector.
  • Private Equity Capital: Record levels of available private equity dry powder.
  • Strong Balance Sheets: Strategic buyers are in a strong position to make acquisitions.
  • Improving Interest Rates: A more favorable interest rate environment.

Positioning for Success in 2025 M&A

  • Preparation is Key: Companies that prepare early for M&A in 2025 will be best positioned to attract buyers and secure favorable valuations.
  • Strategic Advantage: Early market entry will help businesses stand out in an increasingly competitive market.

How Hexagon Can Help

Hexagon Capital Alliance specializes in M&A advisory for the personal care sector. We help businesses:

  • Prepare for Sale: Position your company to attract the right buyers.
  • Raise Capital: Assist in securing the necessary capital for growth.

For more information or questions, please contact our contributors:

Rich Anderson, Managing Director: randerson@hexagoncapitalalliance.com

Johnny Sherwood, Director: jsherwood@hexagoncapitalalliance.com

Brennan Anderson, Vice President: [email protected]

Banker Insights: 2025 Healthcare M&A Activity Outlook

2025 healthcare services
M&A activity outlook

M&A Activity outlook

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What to Expect and How to Prepare

With 2024 now in the rearview mirror, we thought we would reach out to our Healthcare clients and prospects with some thoughts on what to expect in 2025.  To get right to the point, the next 12 months are expected to be very active for Healthcare M&A and Hexagon predicts 2025 will be a strong seller’s market:

Private Equity Demand

Many Private Equity Buyers have been sitting on the sidelines for the last couple of years due to a higher interest rate environment and valuation sticker shock within the healthcare space from 2020-2023. Most of these groups are starting to feel pressure from their investors to deploy the record amount of capital that they have raised but have not yet invested.

Falling Inflation/Interest Rate Cuts

While the country is still in a relatively high inflationary environment, inflation rates have been tapering off compared to recent years and there is an expectation that the Federal Reserve will likely effect modest rate cuts in 2025.  Lower interest rates enable buyers to use cheaper debt in their acquisitions and therefore cause buying activity to increase.

Competition for Deals

With so many Private Equity buyers jumping back into the M&A market, the competition for good quality healthcare deals will be fierce and therefore likely to push valuations up.

Healthcare business owners who have been contemplating a sale or capital raise in 2025 or even early 2026 should start preparing now.  While competition for deals is expected to be high, buyers are placing greater emphasis on due diligence.  Areas such as regulatory compliance, staff retention rates, as well as billing and coding practices are being scrutinized much more thoroughly.  Sellers that are well-prepared for this buyer due diligence, can generally expect to close their deals faster and can in many cases command a premium valuation.

Hexagon’s Healthcare M&A team has helped hundreds of healthcare business owners navigate successful transactions.  Give us a call if you would like to have a confidential discussion pertaining to your company.

For more information or questions, please contact the Healthcare Services team:

Paul Kacik, Managing Director: pkacik@hexagoncapitalalliance.com

Brad Erhart, Director: berhart@hexagoncapitalalliance.com

Market Monitor: Building Products & Materials

Market Monitor: Building Products & materials

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Highlights:

North American Glass Market: Anticipated Growth Amid Economic Changes

The North American glass market is positioned for remarkable growth in the coming years, particularly following the Federal Reserve’s first interest rate cut since the COVID-19 pandemic. This strategic move, which includes an aggressive 50 basis points reduction, signals a shift in focus towards job growth while recalibrating inflation and unemployment objectives.

Projected Market Growth

Currently valued at over $30 billion, the glass manufacturing market in North America is projected to expand to more than $45 billion by 2030. This growth reflects an increasing demand across various sectors, including residential and commercial applications.

Mergers and Acquisitions in the Glass Industry

Well-capitalized strategic buyers are actively leveraging mergers and acquisitions (M&A) to enhance their offerings, capabilities, and market reach. This trend is expected to accelerate as the market begins to recover, particularly benefiting window and door manufacturers in both residential and commercial sectors.

Economic Easing and Its Impact

The anticipated economic easing cycle is likely to stimulate significant M&A activity within the glass market. As businesses adapt to the changing economic landscape, a rebound in M&A activity is already underway in 2024, setting the stage for robust growth in the industry.

For more information or questions, please contact our contributor:

Andrew Suen, Managing Director: asuen@hexagoncapitalalliance.com

 

Banker Insights: 2026 Estate and Gift Tax Exemption Change

2026 Estate and Gift Tax Exemption Change:

As we look ahead to 2026, middle market business owners face significant changes with the estate and gift tax exemption, which is scheduled to reduce from $13.61 million per person ($27.22 million for a married couple) today to roughly half of these amounts beginning January 1st, 2026. This impending shift presents both challenges and opportunities in the M&A landscape.

Accelerated Transactions: Seizing the Window of Opportunity

The reduction in the estate and gift tax exemption is expected to create a sense of urgency among business owners. Many will look to expedite M&A transactions to benefit from the higher exemption before it decreases. This urgency can lead to a surge in market activity, with owners keen to finalize deals while the tax environment is more favorable. By acting promptly, you allow time for preparing your business for a sale transaction in 2025.

Market Dynamics: Timing Your Moves

The impending change is likely to create a spike in M&A activity leading up to 2026, followed by a potential slowdown as the market re-adjusts. Strategic planning and preparation will be essential to capitalize on the wave. The U.S. experienced a similar phenomenon in 2012 leading up to the implementation of the American Taxpayer Relief Act (increasing the Federal Capital Gains Rate), where middle market deal volume increased by approximately 34% over 2011 as business owners aimed to complete transactions before the new tax provisions came into effect.

Increased Advisory Demand: Leveraging Expert Guidance

With impactful changes on the horizon, there will be a heightened need for expert advisory services. Even if you are not contemplating an immediate sale of your company, it is beneficial to begin preliminary discussions with an estate tax advisor and an investment banking advisor for several reasons:

  • Hexagon Capital Alliance (“HCA”) can provide relevant and valuable insights into market trends, helping you make informed decisions.
  • We can assist with your company’s strategic planning, helping you to position the company when it is time to go-to-market.
  • The process of selling a business involves numerous complexities, including due diligence, negotiations, and regulatory compliance. Having the luxury of time to understand the nuances of your business will help ensure that the process goes as smoothly as possible as opposed to waiting until the “last minute” to contact an investment banking advisor.
  • Our goal is to maximize value for our clients. By working with you early, we can take an offensive approach once the decision is made to sell your business. By working with HCA well before contacting buyers, we can make the process as efficient as possible, reducing execution risk and accelerating the time to close. With the anticipated tax changes, maximizing valuation becomes even more critical as owners aim to secure the best possible deal before the new estate tax rate and gift tax exemption is in effect.

Starting the M&A process early with the assistance of an investment banking advisor provides business owners with strategic advantages, including optimal timing, maximized valuations, favorable structure, and efficient transaction management. These benefits are crucial for navigating the upcoming 2026 tax changes and ensuring that business owners achieve their financial and legacy goals. Engaging with an investment banking advisor now is a proactive step towards securing a successful exit strategy.

Market Monitor: Flavors & Fragrances

Market Monitor: FLAvors & fragrances

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Making the right decisions for your business starts with having the most accurate and current information available. Our Flavors & Fragrances Market Monitor keeps you up to date on the events, trends, and market forces that shape and guide the industry.

The Allure of Flavors & Fragrances

Flavors & Fragrances companies are captivating strategic acquirers and private equity investors due to their loyal customer bases, enticing gross margins, and abundant growth prospects.

The Power of Flavors & Fragrances

Despite their minimal share in product costs, Flavors & Fragrances significantly influence consumer choices, resulting in high switching costs and formidable barriers to entry.

Key Attributes Driving Premium Valuations

Hexagon Capital Alliance has identified pivotal characteristics that attract interest and elevate valuations:

  1. Robust R&D Function: Technical expertise and a proficient team of certified flavorists drive innovation and product differentiation.

  2. Thriving End-Markets and Formats: Focus on high-growth segments like sports nutrition and better-for-you snacks, with expertise in sought-after formats such as functional gummies and RTD beverages.

  3. Appealing Gross Margins: Premium, tailored flavors command strong margins, bolstered by the inertia of high switching costs.

  4. Experience with Emerging Brands: Adaptability and agility to meet the evolving needs and swift market entry demands of emerging brands.

  5. Embracing Natural & Organic Trends: Predominantly featuring a portfolio of natural and/or organic flavors to align with the flourishing clean label movement.

  6. Robust Backlog: Proactive sales pipeline coupled with a surge in sample requests, underpinned by a stellar conversion track record.

  7. Manufacturing Capabilities: Versatile liquid and powder manufacturing capabilities, including spray drying, with ample capacity to facilitate expansion.

Embracing these attributes not only attracts interest but also enables Flavors & Fragrances companies to command premium valuations in the market.

For more information or questions, please contact our contributors:

Rich Anderson, Managing Director: randerson@hexagoncapitalalliance.com

Johnny Sherwood, Director: jsherwood@hexagoncapitalalliance.com

Brennan Anderson, Vice President: [email protected]