Mergers and acquisitions (M&A) in the pet industry have cooled in recent years from the frenzied pace seen during the pandemic, according to Cascadia Capital’s Pet Industry Overview – Summer 2025. The firm’s analysts see a shift from aggressive dealmaking to more cautious, targeted business deals as macroeconomic headwinds weigh on the pet sector. However, private equity investors may be ready to resume robust investment in the pet food industry.
“Private equity investment activity exploded beginning H2 2020 for six quarters, experiencing a sharp decline in Q1 2022,” Cascadia analysts wrote. “After a period of normalization in 2022 and 2023, an uptick in activity in 2024 appears promising. With a recent decline in interest rates, coupled with record-level private equity dry powder, there is reason to be optimistic about a rebound in private equity deal activity beginning in 2025.”
Pet food industry deal volume normalizes post-pandemic
Following a boom in 2021 driven by pandemic-fueled pet ownership and investor enthusiasm, deal volume has moderated. U.S. M&A activity, while still robust, has declined from its pandemic peak. The number of transactions involving sub-US$1 billion deal values held relatively steady through 2024 and into early 2025, but below 2021 levels.
In 2024, only 15% of pet industry deals brought to market closed through a bank-led process, the lowest realization rate Cascadia has tracked. Several deals were shelved, with acquirers citing valuation gaps and economic uncertainty.
Despite the slowdown, strategic and financial buyers are still active, particularly for differentiated assets. Companies with strong fundamentals, proven profitability and defensible market positions continue to command premium market valuations.
Capital caution amid macro headwinds
Several macroeconomic factors have contributed to the cooling M&A environment. The Trump administration’s sweeping tariffs, announced in April 2025, raised uncertainty in a supply chain still recovering from pandemic-era disruptions. As the industry waits to understand the downstream effects on costs and inflation, Federal Reserve interest rate cuts have been postponed, further dampening deal momentum.
These factors have caused acquirers to extend diligence timelines and delay capital deployment. Even with significant private equity potential, now exceeding US$1 trillion, investors are being more selective.
Recent M&A deals in the pet food industry
Despite the slower pace, the industry has seen several acquisitions so far in 2025:
- Colgate-Palmolive’s Hill’s Pet Nutrition announced its acquisition of Australia-based Prime100 in February 2025, expanding into the therapeutic fresh dog food category.
- E2P acquired premium pet food maker Bil-Jac Foods in May 2024.
- Custom Veterinary Services, backed by Align Capital Partners, merged with Green Mountain Animal to form CompletePet LLC, a vertically integrated supplements platform.
Forecast for pet food M&A in 2025
While the deal count may have slowed, the fundamentals supporting pet industry M&A remain intact, according to Cascadia’s analysts. Pet humanization, premiumization and resilience to economic cycles continue to attract investors. As interest rates stabilize and tariff impacts become clearer, industry analysts expect a modest rebound in deal activity, driven by strategic fit and operational performance rather than growth alone.
The go-go days of 2021 may be behind for the pet food industry. However, M&A continues, although with more discipline and patience than before.
