For owners with businesses performing well, now is a good time to act on liquidity
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For several years, many consumer-brand founders heard a discouraging message: this is not the time to sell. Buyers are cautious, valuations are lower, financing is harder and the easy money that once rewarded growth without profits is gone.
That message wasn’t wrong. Higher interest rates, tariff uncertainty, uneven consumer demand and the collapse of growth-at-any-price investing made it hard to sell or get liquidity.
Antoine Munfakh, the Deputy Global Head of Private Equity at alternative asset manager Apollo Global, recently spoke to CNBC about the “years of delayed exits,” how private equity firms were delaying their sales of portfolio companies and “a $4 trillion backlog of unsold assets.”
But a weak market is not the same as a closed one.
For the right consumer brands, the exit window is opening again. The right companies have proof: repeat customers, resilient margins, disciplined inventory management and profits that show up in the numbers.
It’s still not open for companies that depend on discounting, channel stuffing or a promise that profitability will arrive sometime. The consumer deal market is not returning to the 2021 version of itself; the exit window now is narrower and more selective but in many ways fundamentally healthier.
No matter the size of a business, if a company has reached scale, has customers who come back without excessive marketing spend and has shown it can consistently make money, buyers are now paying attention.
Recent Deals Show What Buyers Want
Think about these recent deals:
DICK’s Sporting Goods’ acquisition of Foot Locker
e.l.f. Beauty’s purchase of Rhode
Kontoor Brands’ (Wrangler and Lee) acquisition of Helly Hansen
Prada’s purchase of Versace
Gildan’s purchase of HanesBrands
They all point to one large idea: using acquisitions to fill portfolio gaps, acquire loyal customers, add scale and improve performance.
One other point matters: these brands were likely to have attracted other acquirors. Nothing makes a buyer more focused and responsive than knowing that there is, or there could be, competition.
The Awkward Middle Stage For Founder-Led Brands
Many founder-owned consumer companies are now reaching an awkward stage. At $50-$150 million in revenue, they’re usually too large to run like start-ups but not yet built like larger companies. Some are profitable, but can’t fund their growth primarily with internally-generated capital. The business is more complex and the risk is all on the shoulders of a small group. Retail relationships are less productive. Digital marketing is less predictable and more costly. Inventory decisions have become more consequential. Tariffs and freight costs can change a good year into an average or down year quickly.
That kind of stress and volatility is often the moment when strategic options should be considered because waiting until the company is forced into a decision is never the right strategy.
The Questions That Determine Value
The companies that are valuable now are the ones that can answer these questions with strength:
- How much of growth comes from repeat customer behavior rather than paid marketing?
- How much margin is real after returns, freight, markdowns and customer service?
- How concentrated is the business by retailer, channel or product?
- How direct and durable is the brand’s relationship with its end consumer?
- Can the company grow without the founder personally driving every important decision?
- Does the brand have pricing power, or has growth come from promotion?
The right answers explain why some smaller businesses are more attractive than larger ones. A $60 million company with high repeat purchase, clean margins, loyal customers and disciplined operations may be worth more to a buyer than a $120 million company that needs constant discounting to maintain volume. Scale still matters, but the quality of earnings and being present in consumers’ minds matters more.
There was a time in consumer brands businesses when it was acceptable for profitability to be a future promise. That time is mostly over outside the startup world. Profitability now is the proof that the brand has real demand, operating discipline and staying power. Periods when profitability has been ignored as a valuation metric are the exception in history and for now, that time is over.
That does not mean every attractive company must maximize current earnings at the expense of growth. There is a balance to be had between marketing to new customers that will be loyal and driving repeat business.
The buyer universe has changed too. Financial sponsors still care about growth, but they are more disciplined about leverage, working capital and margins. Strategic buyers are often looking for brands that fill a portfolio need, open a customer segment or bring credibility in a category where they are underrepresented. Buyers now want brands that will bring profitable customers, not just products.
In A Selective Market, Process Matters
Companies seeking liquidity should not assume that the right buyer will simply appear at the right time. In a selective market, the best outcomes come when sellers understand which buyers have a strategic reason to care and create enough competitive tension to make those buyers act. Talking to buyers one at a time gives the buyer control of the process. The objective is to identify multiple buyers with a strategic reason to care and give them motivation to act.
One big mistake we see sellers making is not having careful controls over inventory. When that happens, slow-moving inventory can hide inside of good inventory metrics and get out of control as a business expands. It results in write-offs that reduce earnings right at the time of a sale and that can kill a deal.
The companies that benefit most from the current exit window aren’t just survivors. They’re the ones that have become better with more disciplined marketing, resilient margins and more measurable customer loyalty. Those businesses can justify high values in any market.
For founder-led brands who want to find liquidity, the opportunity is if their brand has proof, not hope. That means management depth, not just founder charisma. Repeat customers, not just viral moments. Strong businesses that can become stronger with the right owner.
The exit window is opening again. But it is not opening for every consumer brand. Brands that used the difficult years to become more disciplined, more profitable and more essential to their customers will own the conversation now. For those companies, this market can be a very good time to think carefully about what comes next in the life cycle of the business.