According to a report released today from Grant Thornton Australia, mid-sized food and beverage businesses need to formulate growth plans or exit strategies in order to capitalise on the increasing number of acquisition and divestment opportunities available in the sector.
The report titled Bite Size, found that despite challenging market conditions globally, Australia has had more food and beverage acquisition targets than any other country in the Asia Pacific region.
According to the report, Australia is ranked as having the fifth highest level of food and beverage transactions globally during the January 2011 to March 2014 period.
Cameron Bacon, Food & Beverage Partner, Grant Thornton Australia said that now is the time for medium sized businesses in the industry to capitalise on either investment of divestment opportunities.
“Acquisition opportunities within the Australian food and beverage sector are receiving interest from local, international and private equity buyers. Fuelled by the sector’s prime position to service Asia’s growing demand for high quality food products, CEOs and owners within the sector need to ensure their businesses are well positioned to capitalise on current opportunities within the sector,” he said.
Bacon said that buyers are heavily focused on the food segment which makes up 75 percent of total transactions within the food and beverage manufacturing sector. In addition, Bacon noted that the report revealed higher valuation multiples were achieved by businesses with strong brands in premium segments.
“As the trading and transaction multiples of Australian food and beverage companies are often lower than equivalent companies in North America or Europe, we will continue to see strong interest from international buyers seeking the opportunity to purchase good quality companies for a reasonable price that are well positioned to benefit from growing Asian demand,” he said.