Leisure, Retail & Consumer Sector:
Gearing up for growth in 2025

M&A activity was driven predominately by strategic corporate acquisitions as businesses looked to grow in a slightly flatter market inorganically. However, the second half of 2024 saw a real step change in momentum with travel in particular starting to gain traction again.

Private equity (PE) continued to be cautious, and general market sentiment has resulted in a continued low level of PE completions in the sector. However, following a prolonged period of cautious investment the outlook into 2025 appears brighter.

It is important to also look at the sub sectors as each has faced different challenges.  Retail and consumer brands have faced the market headwinds from the change of government and businesses are having to rapidly rework budgets to take account of the significant cost increases from the UK budget. However, for a sub sector that has faced continual headwinds for the last 5 years, resilience in operators means that focus remains firmly on driving to a transaction, creating optimism for 2025.

As noted above, the second half of 2024 saw a real step change in M&A interest in the travel sector, with BDO securing investment into 3 travel businesses (Simpson Travel, which was invested in by Risk Capital Partners; Piper Private Equity took a stake in Martin Randall Travel; and Soho Square invested in Newmarket Holidays). This increased M&A interest was off the back of a sustained growth in passenger numbers over recent years, which are now above pre-Covid levels. as customers still seek to enjoy new experiences or the excitement of a holiday, prioritising such discretionary spend over purchases of ‘things’.

As with other sectors, the UK budget accelerated some transactions, but did not change the M&A landscape fundamentally, and our clients remain focused on doing the right deal, at the right time.

It has continued to be imperative that businesses in the sector have a strong management team and well invested platforms. Private Equity in particular, is looking for businesses to have invested in software, people and infrastructure versus having a wide to do list post deal. Therefore, as we move into 2025, our recommendation would be to move forward and not standstill. 

Optimism Amid Challenges for 2025 

Despite lingering macroeconomic headwinds, such as persistent inflation and geopolitical uncertainties, the sector remains poised for growth, and more interestingly is seeing a return of appetite from debt lending to drive the Private Equity and IPO market.

The IPO of Applied Nutrition in October was an important transaction not only for the company, but also to show that London is still the place for ambitious companies looking for support for their growth plans and hopefully this will pave the way for an upturn in the UK IPO market for consumer as well as other sectors.

We also expect continued M&A in the travel sector in 2025 and beyond, given that PE has held stakes in several travel companies since pre-Covid.