US Food Manufacturing M&A
2025 DATA & 2026 INDUSTRY OUTLOOK
Business Brokerage
Strategic Resilience
The 2025 fiscal year confirmed food manufacturing as a defensive stronghold. While broader industrial M&A saw significant cooling, the "necessity" aspect of food production kept valuations stable.
In 2026, we anticipate a "Value Thaw." As interest rate volatility decreases, buyers are moving from "defense" back to "offense," specifically targeting assets that provide supply chain security or innovative "Better-For-You" categories.
Avg EBITDA Multiple for Mid-Market Firms ($10M+ Revenue)
Projected Increase in Transaction Volume for LMM
Primary 2026 Buyer Driver
The "Co-Man Pivot": Acquirers are paying 1.0x - 1.5x premiums for companies that manufacture for Tier-1 CPG brands under long-term agreements.
01 The Lower Middle Market (LMM) Valuation Bridge
For smaller food manufacturers, valuation is often a calculation of **Seller’s Discretionary Earnings (SDE)**. However, as a business scales past $1.5M in earnings, sophisticated buyers (PE firms/Strategics) pivot to **EBITDA**. Understanding where your business sits on this bridge is crucial for setting exit expectations.
Typical LMM SDE Multiples
3.2x — 4.8x
Applies to firms with $500k – $1.5M in cash flow. Top of the range is reserved for companies with clean audits and high facility automation.
When do you switch to EBITDA?
- ✔ Earnings exceed $1M (Normalized)
- ✔ Full management team in place
- ✔ Strategic value beyond the owner's rolodex
Market Multiples: SDE vs EBITDA (2025/2026)
2026 Demand Matrix
02 The Atlantic Coast Analysis
Not all sub-sectors are created equal. The 2026 market is favoring **supply chain integration**. Buyers are looking for companies that own their manufacturing processes rather than outsourcing, as it protects margins against commodity price swings.
Contract Mfg (Co-Man): Massive demand from large CPG firms looking to outsource production to nimble, SQF-certified facilities.
Functional Foods: High-protein, clean-label, and gluten-free facilities are commanding a 2.0x multiple premium.
Market Momentum
The 2025 correction allowed valuations to normalize after the 2022-2023 surge. For 2026, the deal pipeline is building with "Quality Assets"—businesses that have spent the last 18 months improving margins and automating production.
Buyer Search Intensity