We decided to take a closer look at exits in Consumer Brands over the past 15 years to understand the value creation trends, for founders. There are two main considerations with respect to exits. First, the mode of exit, whether it’s selling to a strategic buyer, a private equity or VC investor, or going public with an IPO. Second, what really drives value for the founder. There’s often a significant gap between the total enterprise value and the personal value creation for the founder. The founder shareholding at exit is the most important variable. Analyzing over 150 consumer exit events since 2008 reveals four key takeaways:
#1 The most common exit route for consumer brands is Mergers & Acquisitions with strategics, driven by an increase in early-stage acquisitions at lower valuations
Since 2008, Strategic M&A has emerged as the leading exit strategy for consumer brands, a trend that has intensified in recent years. From 2020 to2023, the number of M&A exits surged to 82—more than double the total from the entire previous decade.
What’s particularly notable is that these exits are happening earlier in a company’s lifecycle, with over 75% of them occurring within the $0–100 million valuation range, in the last 3–4 years.
A noteworthy shift post 2020, is the rise of insurgent startups like Mamaearth and My Glamm, which have themselves become acquirers. Such companies, driven by increased access to capital and a need to scale quickly, have led about 20% of recent M&A deals.
This trend towards earlier and lower valuation exits signals a maturing ecosystem, with more players entering the market and an increase in acquisitions at lower valuations.
#2 Consumer brands’ exits take time and are not unicorn outcomes
For a founder, there’s more than a 70% chance that their exit will come through an M&A. Perhaps more tellingly, 90% of the exits in the last 15 years were valued under a billion-dollar.
While billion-dollar exits are possible, the reality is that most consumer brand exits fall below that threshold. It is, therefore, crucial for founders to align their expectations with these market realities.
The data shows two main valuation bands where consumer brand exits tend to cluster: the $0–50 million range and the $100–300 million range, with strategic M&A being the primary exit route in the $100–300 million band.
It’s important to note that strategics look beyond just top-line growth. They place significant value on capabilities they can acquire and dominant market share in a specific area. Key capabilities include digital customer acquisition, backward integration, and market share in product categories, channels, or geographies. Therefore, for founders operating in the $0–300 million band, maintaining focus and avoiding the dilution of resources, is crucial.
#3 Despite exit at lower enterprise valuations, high founder stake drives meaty founder value
A common misconception is that only billion-dollar exits yield meaningful returns for founders. However, in the consumer landscape, it is evident that high founder stake can drive substantial founder value, even at lower enterprise valuations.
In fact, for 65% of consumer brands that have exited since 2008, founders have maintained shareholding of over 60%. This has allowed them to realise meaningful value without chasing high valuations, unrealistic growth trajectories or stretching their resources too thin.
Founders have secured a median exit value of $195M when the EV was between $200–300M, due to their high shareholding.
This highlights an important learning: consumer brands can be built in a capital-efficient manner. Founders don’t need to dilute heavily and can drive towards great exits without chasing unrealistic growth.
#4 While highest exit activity is seen in Food and Beverage, Beauty and Personal Care, and Apparel, revenue multiple is determined by the fundamental health of a business.
A closer look at exit activity across sectors reveals some interesting patterns.
In M&A exits, Food & Beverages (F&B) stands out as the most active sector, followed by Beauty & Personal Care (BPC), and Apparel. The high number of exits in these categories suggests a strong presence of acquirers, which is beneficial for founders as it can lead to more favourable pricing and terms during exit negotiations.
On the IPO front, Apparel leads with 12 exits, followed by Food & Beverages with 9, and Beauty & Personal Care with 2– though the numbers are lower compared to M&A activity.
While the median revenue multiples for M&A exits in sectors like Apparel and Food & Beverages may seem modest, there are notable outliers that have achieved significantly higher returns. This suggests that strong returns are possible, especially in IPO scenarios where profitability is key.
Furthermore, an analysis of high valuation exits shows that brands maintaining strong business fundamentals, capital efficiency (>1.5x) and Revenue CAGR (≥ 30%), have performed exceptionally well. These brands achieved a median revenue multiple of 5.1x in M&A exits, nearly double the overall median of 2.7x, and a median revenue multiple of 9.0x in IPOs, more than double the overall median of 4.0x.
As the consumer brand landscape evolves, exit outcomes increasingly hinge on the strength of a business’s fundamentals. Founders who prioritise these fundamentals will be better positioned for successful outcomes.
—The authors; Hariharan Premkumar is MD & Head of India at DSG consumer Partners, and Navneet Chahal is Partner Bain & Co. The views expressed are personal.
