Driving Value Through M&A in FAB: Strategic Acquisition and Spin-Out Opportunities

Driving Value Through M&A in FAB: Strategic Acquisition and Spin-Out Opportunities
August 21, 2025 12 mins

Driving Value Through M&A in FAB: Strategic Acquisition and Spin-Out Opportunities

Driving Value Through M&A in FAB: Strategic Acquisition and Spin-Out Opportunities

Strategic acquisitions and divestitures are essential for survival and growth in the FAB industry, but increasing risks demand a reevaluation of traditional dealmaking tactics.

Key Takeaways
  1. Cost pressures, supply chain optimization, shifting consumer preferences, technological advancements and tightening regulations are driving both challenges and opportunities for M&A activity.
  2. To succeed in this complex environment, dealmakers must adopt innovative strategies, including proactive risk and people management and comprehensive due diligence.
  3. Robust integration plans and early advisor involvement are critical to maximize deal value and ensure deal success.

Food, agribusiness and beverage (FAB) industry merger and acquisition (M&A) deal volumes rebounded with year-on-year growth in 2024. It was the sector's second-strongest year in nearly a decade and extended a two-year growth streak in PE deal count,1 signifying the industry’s resilience and increasing prominence in the financial landscape. While the anticipated boom in activity across all industries in 2025 has been softened by global headwinds, there is a strong pipeline of activity helping to maintain momentum.

Exciting advancements and innovations have ensured the FAB industry stays an attractive proposition to dealmakers. The global food market has a current value of $9.45 trillion, and with a rising global population to feed and technological advancements reshaping the market, growth is predicted at an annual rate of 6.34 percent.2

However, amid bubbling opportunities, evolving risks — including digitalization and AI, regulation, geopolitics and climate change — are impacting strategic transactions. Here, we explore the challenges and opportunities requiring dealmakers to sharpen their tactics, as well as the solutions that help to leverage value and mitigate risks.

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The FAB market is seeing a mix of both acquisitions and spin-outs, with corporate clients buying supporting businesses and some larger companies divesting non-core, low-margin, volatile assets to focus on more profitable segments. While there have been fewer mega-deals, small to mid-market activity remains robust, particularly in North America.

Rebecca Newman
Head of M&A Transaction Advisory Services, United States

Current Drivers of Industry Challenges and Opportunities

Cost Pressures

Commodity pricing remains restricted by economic challenges, rising geopolitical tensions and the impacts of climate change on crop yields. The increasing cost of risk is also adding pressure to FAB organizations. For example, higher auto insurance claims and growing supply chain risks have contributed to rising insurance and logistics costs, as leaders look for better safeguards within a complex global trade market.3 Tariff uncertainty has compounded these challenges, becoming a significant concern across the industry, particularly for premium products, such as alcoholic spirits, or those imported in high quantities, such as coffee, seafood, exotic fruit and chocolate. The resulting unpredictability has not only created concern among consumers — who have already gone through a long period of food inflation — but is driving hesitancy over portfolio decision making. As the industry waits to determine the impacts of future tariffs, uncertainty is likely to continue lowering the appetite of dealmakers.

Supply Chain Optimization

As cost pressures continue to bite, FAB organizations are looking to supply chain solutions to uncover cost optimization. Despite their sophistication, the vulnerabilities within the industry’s global and complex supply chains have been challenged by labor shortages, climate-induced crop failure and geopolitical disruptions.4 Against this backdrop, supply chain resilience and product quality remain critical priorities for FAB leaders. Today, an increasing number of organizations are building partnerships with farmers and growers to secure the supply of key commodities, such as coffee and cocoa — ventures that can also support an organization’s sustainability ambitions.5

509

2024 saw an upswing of 509 transactions in FAB M&A activity.

Source: A health focus drives PE deal growth in food & beverage in 2024, PitchBook

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Shifting Consumer Preferences

Changing consumer demands have always been a driving force for innovation within the FAB industry, and today, a shift toward health, sustainability and convenience is driving the latest evolution and impacting M&A decision making. Dairy producers and cooperatives, for example, have felt the direct impacts of consumer choices shifting toward plant-based alternatives, driving divestitures of volatile commodity-based products.6 However, growing consumer interest in high-margin snack and protein products, cheese and yogurt, supplements and health-focused products is creating growth opportunities for the industry.

Drug Development Impacts

While the development of GLP-1 medication has reshaped the life sciences industry, the FAB industry is also keenly observing its impacts. A key focus for industry players will be understanding how the growing adoption of GLP-1 medication will influence consumer dietary patterns. One in eight American adults have tried these drugs.7 Their impact on the types of products people buy and the amount they purchase could create significant shifts within the market. Initial research suggests that in the U.S., a typical three percent reduction in total caloric demand, as a result of using GLP-1s, amounts to 20 billion fewer calories of food consumed per day and about $1.2 billion less spent per week.8

71%

of Americans are trying to consume more protein, up from 59 percent in 2022.

Source: 2024 IFIC Food & Health Survey, International Food Information Council

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Technological Advances

Technology is helping to reshape the trajectory and operations of businesses across all industries, but future advances could have even more profound effects within the FAB sector. AgTech and regenerative farming are expected to play a critical role in feeding a growing global population and overcoming the challenges of a warming climate and the depletion of natural resources.9 Alternative proteins, precision technology and sustainable packaging are just some of the innovations driving FAB M&A activity. As a result, larger industry players continue to acquire niche operations for their intellectual property (IP) and cutting-edge technologies. Research suggests that AI food technology is outpacing the overall AI market and is set to grow at a 34.5 percent annual rate through 2034,10 creating opportunities to streamline operations across production, packaging and distribution. However, as opportunities increase, so do the risks. The recent wave of targeted and costly attacks on FAB retailers and distributors has highlighted the importance of robust cyber resilience within transactions, particularly within supply chains.11

£27B

The projected value of the AI-driven FoodTech market by 2029.

Source: Global Artificial Intelligence (AI) In Foodtech Market Outlook 2025-2034: Growth Drivers, Share, And Trends, WhaTech

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Tightening Regulation

The FAB sector operates in an increasingly complex, highly regulated environment — from food safety and sustainability to labor laws and trade practices. Most recently, regulation has demanded increased transparency and traceability throughout the supply chain. In the EU, responsible sourcing and enhanced recyclability are being driven by the EU Deforestation Regulation12 and the Packaging and Packaging Waste Regulation13 respectively. In the U.S., the Food Safety Modernization Act14 requires rapid tracing of products back to their source across the whole supply chain. A tightening regulatory environment can propel M&A activity as companies look to acquire expertise and knowledge to meet evolving requirements. However, regulation also complicates transactions through the increased costs of evolving compliance. Beyond increased transaction costs, delays in internal approvals or regulatory coordination can affect investor confidence and introduce uncertainty into deal execution. Intensifying scrutiny of ingredients, especially flavors, colorings and ultra-processed foods, is also becoming an escalating risk against the threat of potential litigation and long-term liability.15

44%

Almost half of buy-side respondents cited withholding tax implications and international tax treaties as the single toughest hurdle they currently face.

Source: M&A Buy-side Insights, Tax for Growth, Aon

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We’re seeing leading companies divest non-core operations so they can accelerate focus and growth in more margin-accretive areas of the business.

Ciara Jackson
Global Food, Agribusiness and Beverage Leader, Enterprise Client Group

Revised Strategies to Meet Evolving Challenges

The pressure to improve operating margins, focus on core business functions and free up cash to invest in areas of strategic growth is widening the appeal of carve-outs for businesses looking to divest non-core or underperforming assets. The current economic climate may also see more distressed businesses become available at affordable prices for organizations with the scale to integrate them.

In an unsettled market, there has been a trend toward valuation misalignment. High seller expectations, fueled by high historical values, have created a standoff between buyers and sellers. However, shifting market dynamics driven by interest rate changes and exit pressures could lead to more realistic seller expectations.

To secure deal value in this environment, dealmakers should look to capitalize on emerging opportunities and uncover cost efficiencies. Doing so requires a refined focus and a proactive approach to risk management, starting with the following three steps:

1. Understand and Prepare for Shifting Consumer Preferences and Technology Advances

Whether it’s health-focused snacking or products that prioritize sustainable production, consumer preferences are shifting the dial, and FAB organizations must develop the agility to keep pace. Dealmakers can use this time to find and research future targets and opportunities, while preparing and positioning themselves for success.

Focus on:

  • Strengthening sell-side strategies by identifying and carving out the appropriate business units and running a comprehensive analysis to establish the true value of an asset.
  • Completing comprehensive buy-side due diligence to uncover risks and opportunities, maximizing value and driving deal success.
2. Comprehensive Risk Assessment and Mitigation

Risks are escalating at every stage of the dealmaking process, and transactions have become increasingly complex. As a result, dealmakers must take a more forensic approach to due diligence — one that explores risks beyond profit and loss, cash flow, and balance sheets to evaluate a deal’s unique strengths, weaknesses and value. Cyber risk assessments, credit solutions, workforce integration, climate risk advisory and IPO insurance are some strategies that can be deployed to de-risk transactions and unlock value.

Focus on:

  • Assessing a broader range of risks. In addition to traditional property and casualty risks, embrace a holistic approach and include emerging risks such as cyber and human capital.
  • Securing quality data that uncovers legal, tax and people risks to understand a transaction's cost implications, operational challenges and growth opportunities.
  • Navigating complex legal and regulatory compliance with litigation and contingent insurance.
  • Increasing liquidity, de-risking a balance sheet and helping M&A deal negotiations with the support of credit and surety solutions.
  • Employing IP insurance to defend patents, trademarks and copyrights or protect against patent infringement claims.
3. Development of Robust Integration Plans

Cultural integration remains a major challenge in M&A deals and is often an underestimated risk, particularly regarding workforces and IT systems. People are the greatest asset of any organization, yet when deals are on the table, the full value employees bring and the challenges of integrating cultures and retaining key employees can often be overlooked. Similarly, with evolving cyber threats, the margin for error is small, and the cost of failure can be significant. More frequently, newly acquired entities are being targeted by malicious actors, creating cyber vulnerabilities across the whole value chain.16 To achieve cost savings and enhance efficiency, robust human capital and cyber strategies are critical. Analyzing the potential financial impact of likely events and the value of insurance, in addition to having a plan to engage with insurers as the business seeks recovery through its risk transfer tools, can minimize the financial impact a company may experience.

Focus on:

  • Developing clear integration plans that assess transition risks and costs. For example, reviewing human capital structures such as health insurance and pensions and considering how they will be moved across and structured within the new entity.
  • Building cyber maturity with solutions that effectively manage risk, transfer risk, and respond effectively to minimize operational and financial impact through post-merger integration, while also creating long-term value. For example, understanding how cyber insurance will be managed post-close to protect the integration and separation of complex IT systems.

M&A remains a vital tool for FAB organizations to adapt, grow and stay competitive within a rapidly changing world. However, as risks escalate, earlier involvement of transaction partners is critical to navigating a more complex and challenging dealmaking environment. From deal structure to assumed liabilities and transaction insurance, earlier advisor involvement helps organizations address these challenges before it’s too late. Armed with innovative solutions, FAB dealmakers can bring greater clarity and certainty to the process, maximizing the chances of deal success and the smooth transition of assets, operations and strategic objectives.

Aon’s Thought Leaders
  • Ciara Jackson
    Global Food, Agribusiness and Beverage Leader, Enterprise Client Group
  • Michael Carr
    Head of M&A and Transaction Solutions, Europe, the Middle East and Africa
  • Michael Lock
    Director, M&A and Transaction Services, United Kingdom
  • Rebecca Newman
    Head of M&A Transaction Advisory Services, United States

1 A health focus drives PE deal growth in food & beverage in 2024, PitchBook
2 Food — worldwide, Statista
3 Logistics Insurance - Global Strategic Business Report, Research and Markets
4 Extreme weather is driving food prices higher. These 5 crops are facing the biggest impacts, World Economic Forum
5 Partnership Opportunities to Transform Food Systems, Centre for Strategic and International Studies
6 Agriculture: Food producers’ M&A struggles may soon lift — Dealspeak North America, ION Analytics
7 How Common Are GLP-1 Drugs Like Ozempic? 13% of U.S. Adults Have Used Them, Healthline
8 Consumers’ Expectations about GLP-1 Drugs Economic Impact on Food System Players, Farmdoc Daily
9 If Agtech is to transform the world, farmers must feel the benefits, World Economic Forum
10 The Latest AI Trends Transforming The Food Industry, Forbes
11 Inside the Cyber Attacks Wreaking Havoc on UK Supermarkets, Technology Magazine
12 Implementation of the EU Deforestation Regulation, European Commission
13 Packaging waste, European Commission
14 Food Safety Modernization Act (FSMA), U.S. FDA
15 Food firms could face legal challenge over ‘addictive’ UPFs, The Grocer
16 Why It’s Key to Conduct Cyber Due Diligence in Financial Services During Mergers and Acquisitions, Aon

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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