Market Monitor: Outdoor & Recreation

Market Monitor: Outdoor & Recreation

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2024 Outdoor & Recreation Market

Market Growth & Increased Participation

2024 was a pivotal year for the Outdoor and Recreation industry, with participation rates rising 4.1% year-over-year, reaching 57.3% of the U.S. population. This surge fueled higher spending on outdoor products, strengthening the market’s recovery.

Inventory Challenges & Strategic Management

Despite growth, inventory overstocking from previous years posed challenges for some segments. However, businesses adopted more efficient inventory management strategies, improving gross margins and financial performance across the sector.

M&A Rebound & Strategic Transactions

For the first time in two years, M&A activity increased, with strategic buyers driving 71% of deals. Privately held companies led acquisitions, while public buyers focused on internal restructuring. However, with inventory pressures easing, public strategic buyers are re-entering the M&A space, as seen in Kontoor’s $900 million acquisition of Helly Hansen.

Resilient Valuations & Strong Brand Equity

Companies with strong brand equity and high gross margins maintained resilient valuations. The Sporting Goods segment saw increased buyer interest, reflecting expanding market opportunities and growth potential.

Tariffs & Competitive Advantage

A key industry concern is potential tariffs, which could increase production costs and lead to higher retail prices and weaker consumer demand. However, businesses with strong margins and agile operations may capitalize on this shift to gain market share.

2025 Outlook: Continued Growth & Momentum

The industry is poised for sustained expansion in 2025, driven by:

  1. Higher participation rates
  2. Improved inventory management
  3. Rising M&A activity   

With positive long-term trends and strategic business shifts, the Outdoor & Recreation market is set for a healthy and active year ahead.

For more information or questions, please contact our contributors:

Rich Anderson, Managing Director: randerson@hexagoncapitalalliance.com

Tyler Dale, Managing Director: tdale@hexagoncapitalalliance.com

Johnny Sherwood, Director: jsherwood@hexagoncapitalalliance.com

Brennan Anderson, Vice President: [email protected]

 

Market Monitor: Healthcare

Market Monitor: Healthcare

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Market Monitor: Healthcare

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

M&A in Healthcare Services M&A Activity

  • 671 U.S. healthcare services M&A transactions in 2024, marking a 10.4% decrease from 2023.
  • Median EV/EBITDA multiples for publicly traded healthcare services companies rose slightly from 13.3x in 2023 to 13.5x in 2024.
  • eHealth services are increasingly replacing traditional third-party healthcare consultants and staffing companies in the healthcare sector.
  • Decline in the Other Services segment reflects growing competition from tech-enabled healthcare solutions.
  • Despite economic and regulatory scrutiny, healthcare services deal volume remained resilient in 2024.
  • Outlook for 2025: Anticipated factors like interest rate cuts, capital buildup, and a clearer U.S. regulatory environment are expected to drive transaction activity across all healthcare sectors, including eHealth and tech-enabled solutions.

If you have any questions, please contact our contributors:

Paul Kacik, Managing Director: pkacik@hexagoncapitalalliance.com

Brad Erhart, Director: berhart@hexagoncapitalalliance.com

 

Market Monitor: Apparel, Accessories & Footwear

Market Monitor: Apparel, Accessories & Footwear

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Market Monitor:
Apparel, Accessories & Footwear

Industry M&A Update

M&A activity in the apparel, accessories, and footwear sectors surged in 2024, with transaction volume doubling from 2023, primarily driven by private equity add-on acquisitions. Strategic buyers also increased their activity in the latter half of the year. As we move into 2025, the market is expected to remain strong, driven by several key factors.

Strong Performance in Footwear and Casual Fashion
  • Footwear: Market capitalization rose by approximately 55% in 2024.
  • Casual Fashion & Retail Brands: Saw a 25% increase in market capitalization.
  • Continued Growth: These sectors are expected to continue driving M&A activity in 2025.
Key Drivers of M&A Activity in 2025

Hexagon sees several factors fueling M&A activity in the coming year:

  • Higher Public Valuations: Strong market performance in footwear and casual apparel.
  • High Levels of Dry Powder: Buyers have significant capital to deploy.
  • CEO Confidence: Increased optimism among CEOs for acquisitions.
  • Lower Interest Rates: Decreased rates will make acquisitions more attractive.
  • Reduced Regulatory Burdens: Easier regulatory environment for transactions.
Preparing for M&A in 205
  • Timing: Companies that prepare early in 2025 will be better positioned to attract buyers and secure favorable valuations.
  • Competitive Advantage: Early preparation will help you stand out in a crowded market.
How Hexagon Can Help?

Hexagon’s M&A team has experience in the apparel, accessories, and footwear sectors. We help businesses:

  • Prepare for Sale: Position your company to attract the right buyers.
  • Raise Capital: Assist with capital-raising efforts.
  • Market Insights: Provide up-to-date M&A market trends.

For more information or questions,  please contact our contributors:

Rich Anderson, Managing Director: [email protected]

Tyler Dale, Managing Director: tdale@hexagoncapitalalliance.com

Johnny Sherwood, Director: jsherwood@hexagoncapitalalliance.com

Brennan Anderson, Vice President: banderson@hexagoncapitalalliance.com

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]

 

Market Monitor: Healthcare

Market Monitor: Healthcare

Read Market Monitor

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Market Monitor: Healthcare

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

  • In Q4 2023, U.S. healthcare services Mergers & Acquisitions (“M&A”) volume reached 183 transactions, with a total of 740 closed deals in 2023, representing a 24.4% decrease from 2022. In 2024, there is anticipation for increased M&A activity driven by private equity investors needing to offload assets and deploy capital. The average holding period among U.S. and Canadian private equity funds spiked to 7.1 years in 2023, the longest in 20+ years, paired with a record-high dry powder of nearly $1 trillion.
  • Further, with the Federal Reserve signaling the possibility of three rate decreases in 2024, that will hopefully loosen up the debt markets and drive additional activity.
  • As healthcare organizations have navigated the various challenge in today’s environment, those that have been able to differentiate and traverse the landscape are positioning themselves as prime acquisition candidates for both strategic and financial buyers.
  • In 2024, we see payer and patient pressure continue to drive the shift of care to outpatient settings as organizations continue to bend the cost curve and provide care in the lowest cost setting, and more organizations adopt technologies that create greater efficiencies.

For more information or questions, please contact our contributors:

Paul Kacik, Managing Director: pkacik@hexagoncapitalalliance.com

Brad Erhart, Director: berhart@hexagoncapitalalliance.com

Daren Oddenino, Director: [email protected]