Merger and acquisition activity across the pet food industry has slowed over the past two years. However, multiple forces outlined in Cascadia Capital’s “Pet Industry Overview: Winter 2025/2026” suggest that the pause may give way to a new, more complex phase of dealmaking. Rather than a broad-based rebound, the next wave of transactions may be selective, shaped by portfolio maturity, limited partner expectations and strategic repositioning by established companies.
According to Cascadia’s analysts, many pet consumables companies that attracted private equity investment in the early 2020s are approaching the end of their typical holding periods. These assets were acquired during a period of strong growth and elevated valuation multiples. As a result, owners are now weighing realized profitability gains against a less accommodating exit environment. This dynamic is expected to push some of these pet food and treat businesses back into the market in the near term.
At the same time, the broader M&A backdrop is less favorable than during the industry’s previous peak. Deal volumes remain subdued, and while valuation multiples have stabilized relative to pre-pandemic norms, they are no longer expanding. Cascadia notes that while some owners are delaying sale processes in hopes of improved market conditions, others are pursuing transactions out of necessity due to leverage constraints or fund lifecycle pressures. This divergence is likely to result in uneven deal flow, with well-positioned assets commanding attention while weaker performers struggle to generate competitive outcomes.
One of the most important implications for the pet food sector is the growing role of diversification-driven acquisitions. Cascadia analysts wrote that pet supplies and hard goods have experienced muted growth, with retail sales increasing only 3.3% year over year in 2024. For companies concentrated in these categories, limited organic growth opportunities are prompting a strategic pivot toward consumables, including pet food and treats. Higher purchase frequency and stronger customer retention make pet food, treats and other consumables an attractive target for companies seeking to stabilize revenue and improve long-term growth prospects.
This diversification trend suggests that future pet food M&A activity will not be driven solely by traditional food manufacturers or financial sponsors. Instead, acquisitions may increasingly involve buyers from adjacent pet categories looking to reset their growth trajectories. For pet food businesses, this could broaden the pool of potential acquirers but also introduce new considerations around integration, channel strategy and brand positioning.
Private equity continuation vehicles’ role in pet food M&A
Another defining feature of the next phase of pet food M&A is the rising use of continuation vehicles by private equity firms. Cascadia highlights that sponsor-backed pet assets have increased materially since 2010, with activity peaking between 2020 and 2022. As many of these investments near the end of their expected hold periods, current market conditions may not support exits that meet return targets. Continuation vehicles allow sponsors to provide liquidity to limited partners while retaining ownership of high-performing assets and extending the investment horizon. Private equity continuation vehicles are investment structures used by private equity firms to hold on to one or more portfolio companies beyond the life of an existing fund, while still providing liquidity to current investors.
The increased use of these structures signals that not all high-quality pet food assets will come to market through traditional sale processes. For industry participants, this may limit the number of marquee acquisition opportunities available in the near term, even as underlying portfolio pressure builds. It also underscores the importance of patience and flexibility for both buyers and sellers navigating today’s environment.
Cascadia’s review of acquisition multiples reinforces the cautious tone. While the firm tracks more than 215 pet industry transactions since 2010, many deals continue to close without public disclosure of revenue or earnings multiples. Stakeholders are therefore operating with incomplete information, adding uncertainty to valuation discussions. In this context, buyers are placing greater emphasis on demonstrated profitability, supply chain resilience and brand durability, rather than growth narratives alone.
Taken together, Cascadia’s analysis points to a pet food M&A market that is evolving rather than rebounding. The next wave of activity is expected to be shaped by a backlog of sponsor-backed assets, strategic diversification efforts and financial engineering tools designed to bridge valuation gaps. For pet food companies, this environment rewards operational discipline and clear strategic positioning.
While the timing and scale of renewed deal activity remain uncertain, Cascadia’s analysis suggests that M&A will continue to play a central role in reshaping the competitive landscape of pet food. The sector’s long-term fundamentals remain intact, but the path forward is likely to be measured, uneven and increasingly nuanced.
