By most accounts 2021 was a chartbuster year in M&A, and buyers, sellers and investors in most sectors had a busy — if not exhaustive — year. The sector saw 4,200 deals and nearly $190 billion in total capital invested in 2021, according to PitchBook. Low interest rates, coupled with anticipation of rising U.S. capital gains tax rates, sped up deal activity, and consumer spending remained robust, says CohnReznick in its Q1 2022 Health & Wellness Investment Report. But 2022 started out differently with 669 deals and almost $23 billion in capital invested. What will happen next?
“I don’t think there was any particular sector that got left behind,” says Daniel Teoh, a managing director in CohnReznick’s transaction advisory services practice.
The “health & wellness” sector, which includes fitness centers, specialty nutrition, beauty /personal care, sports, outdoor and active living, certainly wasn’t exempt from dealmaking activity. Last year saw more than 3,900 transactions in these categories, and more than $174 billion in total capital invested, CohnReznick reported. Large strategic corporations — such as Coca-Cola, which acquired BA Sports Nutrition, a maker of electrolyte-packed drinks made from coconut water, for $5.6 billion in Q4 — were active, but middle-market players also had a tiring but hearty year. Only brick-and-mortar fitness centers suffered during the pandemic, which scared off some investors in 2020 and 2021, Teoh said.
So what’s happening in 2022? Dealmakers took a bit of a pause in Q1, which could be attributed to the war in Ukraine, inflation, and downright fatigue.
But expect deal activity to pick up and stay strong for the rest of the year, as consumers aim to take charge of their own health and care increasingly about sustainability messaging, particularly of newer and smaller brands, CohnReznick reported. Sellers are committed to selling, private equity firms have money to spend and new startups have emerged in the health and wellness space so the pipeline looks good going forward, Teoh said. “M&A [in the sector] is still going to be strong,” he predicted.