When President Donald Trump’s “Liberation Day” tariffs first hit in April, the conventional dealmaking wisdom was that the mergers and acquisition market would get swamped in the trade war.
The outlook was just too uncertain and the expense of even the threat of tariffs was too high to make any kind of real bets on the future. Both strategic and financial buyers were expected to wait until the smoke cleared and then buy into whatever new market reality emerged.
But the market decided not to wait.
Investors last quarter felt good enough to go with their gut and bet on their own reality.
The result was fewer, but bigger, deals, according to KPMG’s second-quarter update on M&A trends in the consumer and retail space.
“Economic uncertainties and geopolitical challenges, such as tariffs and looming inflation concerns, haven’t paralyzed the market,” KPMG said. “On the contrary, significant transactions have flourished, driven by dealmakers’ recalibration of priorities and a flight to quality in response to consumer demand.”
While the number of deals fell to 496, a 14.6 percent decline from a year earlier, the value of the transactions that did get signed shot up 194 percent to $34.7 billion.
“Dealmakers doubled down on wellness, digital, and distressed assets — prioritizing strategic clarity over deal count as consumer and retail M&A roared back in value,” said Frank Petraglia, a partner at KPMG Advisory, in the report.
KPMG pointed to an increase in “high-confidence investments” for both private equity and strategic buyers.
“They bought digital-native brands, consolidated distressed assets, and doubled down on wellness, frozen foods, and omnichannel capabilities,” the report said.
That included Unilever’s $1.5 billion deal for Dr. Squatch and E.l.f. Beauty’s $1 billion acquisition of Hailey Bieber’s Rhode.
“Retail, meanwhile, is undergoing a survivalist transformation,” KPMG said. “Consolidation is no longer optional, it’s existential. Dick’s Sporting Goods’ $2.4 billion acquisition of Foot Locker and DoorDash’s multibillion-dollar spree — Deliveroo, SevenRooms, Symbiosys — reflect a strategic pivot toward operational efficiency, market share capture and tech-enabled resilience.”
And KPMG said private equity firms are “targeting carve-outs, founder-led brands, and wellness platforms with scalable economics and strong exit potential, bolstered by expanding access to private credit.” The example there was 3G Capital’s $9.4 billion deal to take Skechers private — the biggest buyout in shoe history.
All in all, the report called it “a quarter of bold moves and strategic clarity.”
“Corporate and PE dealmakers alike are coming off the sidelines when the strategy is sound and the value creation path is visible from Day One,” KPMG said.
If Trump’s tariffs gave dealmakers pause at first — and still have would-be investors looking over their shoulders — other elements of the president’s agenda have helped nudge the big-money buyers ahead.
“The One Big Beautiful Bill Act is reshaping the M&A landscape in consumer and retail by incentivizing greater capital deployment through an enhanced cash tax shield for new investments and the immediate expensing of R&D, exploration costs, and capital expenditures — boosting ROI and freeing up funds for expansion,” KPMG said. “For PE, front‑loading these deductions over a typical three to five year holding period materially improves after‑tax returns. For corporates, it reduces income tax expenses and increases earnings per share. Additionally, the removal of prior interest‑deductibility limits tied to EBITDA [earnings before interest, taxes, depreciation and amortization] gives PE portfolio companies a broader range of deductible interest, further enhancing leveraged deal economics.”