Capital & Credit
Q2 2026
Plenty of Money, Less Patience
Research through Jul 24, 2026
Record venture dollars, $1.2 trillion of M&A and a reopened IPO window conceal a middle market financing itself through add-ons, extensions and structure. In food and beverage, sponsor capital moved one layer back — behind the brand.
OMAHA, Neb. — Capital did not retreat in the second quarter. It became opinionated.
Higher borrowing costs
Risk aversion
US venture funding reached $412.7 billion in the first half, nearly 30% above the total for all of 2025. Announced U.S. M&A hit roughly $1.2 trillion through May, almost double the comparable 2025 figure. Traditional U.S. IPOs raised approximately $114.2 billion through June, against $14.8 billion in the first half of last year, according to PwC.
Every one of those numbers is a record or near-record. Every one of them is also concentrated.
Artificial intelligence took 86% of first-half venture dollars. Rounds of $100 million or more took 87.5%. Thirty-nine deals of $5 billion or more supplied roughly 64% of U.S. M&A value while transaction count fell 4%. A single listing supplied much of the IPO proceeds.
Beneath the headline, the arithmetic reverses. Private equity deal value fell 37.5% sequentially to $177.3 billion, the weakest quarter in two and a half years, even as deal count rose 11.5% year over year. Direct lending fell 55% to $33.6 billion, the lowest quarterly total since the second quarter of 2023. Add-ons accounted for roughly three-quarters of buyout count. Amend-to-extend volume reached its highest level since the financial crisis.
The pattern is consistent enough to state plainly. Aggregate dollars are rising. The median company’s financing environment is tightening. Both statements are true, and only one of them makes the chart.
Food and beverage supplies the cleanest illustration. Global sponsor deal value in food and beverage consumer packaged goods reached $9.7 billion in the quarter, down 21% from the first quarter and 12% from a year earlier, PitchBook reported. Two transactions — CVC Capital Partners’ $3.5 billion secondary buyout of the Italian ingredients platform IRCA and Europastry’s $810 million acquisition of Highland Baking Company — accounted for nearly half of it.
Neither is a brand.
PLATFORM CREATION PAUSED
AT A GLANCE
Market Overview
Venture Capital
Record Dollars Narrow the Door
Hours worked continued to slip.
Market Overview
Private Equity
The Holding Period is the Investment
Tighter credit, higher risk.
Lead Overview
IPO
The Window Is Open; the Guest List Is Short
Activity contracting for 3 straight months.
Market Overview
Mergers & Acquisitions
A Tall Market, Not a Broad One
Growth momentum remains weak.
What’s News
1. U.S. venture funding reached $412.7 billion in the first half, nearly 30% above all of 2025. Artificial intelligence took 86% of it, and rounds above $100 million took 87.5%.
2. Announced U.S. M&A hit roughly $1.2 trillion through May on 4% lower volume. Thirty-nine deals of $5 billion or more supplied about 64% of the value.
3. Private equity deal value fell 37.5% sequentially to $177.3 billion, the weakest quarter in two and a half years, while deal count rose 11.5% year over year. Add-ons were roughly three-quarters of buyout count.
4. Direct lending fell 55% to $33.6 billion, the lowest since Q2 2023 — and spreads widened anyway, to approximately SOFR plus 509 basis points on direct-lending LBOs.
5. Amend-to-extend volume reached $29.5 billion, the highest quarterly total since the financial crisis, against a 2028 maturity wall of roughly $208.5 billion.
6. Traditional U.S. IPOs raised approximately $114.2 billion through June against $14.8 billion a year earlier. PE-backed listings were the only sponsor exit channel to grow sequentially.
7. In food and beverage CPG, sponsor deal value fell to $9.7 billion globally, down 21% sequentially. Two transactions at the ingredient and manufacturing layer supplied nearly half of it.
8. Brand-level functional beverages logged five sponsor deals in the first half; vitamins and supplements logged six. Wellness demand is not translating into brand-level capital.
9. Multiple expansion supplied about 16% of food and beverage buyout profit in the 2021-2025 vintages, down from 58% in 2013-2018. Returns now require revenue and margin.
10. U.S. private equity holds 13,509 portfolio companies — more than a decade of inventory at current exit pace.
The Money Move Behind the Brand
Sponsors spent the quarter buying ingredients, industrial bakery and manufacturing capacity. Brand-level wellness names went nearly unfunded.
The most useful fact about consumer dealmaking in the second quarter is where the capital did not go.
Wellness demand is not in question. Reformulation, clean label, protein and gut health continue to move volume, and public company management teams spent their earnings calls saying so. Kraft Heinz’s answer to a low-single-digit revenue decline was a protein-and-fiber macaroni and cheese line.
Yet brand-level vitamins and supplements logged six sponsor deals in the first half. Functional beverages logged five. PitchBook, which tracks the segment, describes itself as underweight both.
The money went one layer back.
CVC agreed in late June to a $3.5 billion secondary buyout of IRCA, the Italian bakery and confectionery ingredients platform, at a $4.95 billion post-money valuation — the quarter’s largest food and beverage CPG transaction and, by PitchBook’s estimate, about 57% of disclosed exit value in the segment. A week earlier, Europastry, the Spanish frozen dough platform backed by MCH Private Equity and Ares Management, agreed to acquire U.S.-based Highland Baking Company for roughly $810 million, extending a European bakery roll-up into North America.
PitchBook’s analysts attribute the shift to a capability gap. Consumer brands want clean-label and reformulation capability and cannot manufacture it themselves, so they buy it from suppliers, and the value accrues to the supplier. An ingredient platform also has more potential acquirers than any single brand, which in their reading gives a sponsor more than one exit.
A brand must predict the consumer. An ingredient or manufacturing platform can serve several versions of the consumer at once.
That distinction is now visible in the deployment data. Shelf-stable food led all segments on capital deployed at approximately $4.8 billion, anchored by IRCA, even though fresh food led on raw deal count at 49 transactions. Animal meat and dairy was the single most active category at 22 deals, continuing a multiyear climb. Baked goods held near its highs after roughly doubling from 36 deals in 2022 to 63 in 2025. Coffee and tea has risen from the low teens in 2022 to the high twenties in 2025 and built again through the first half of 2026.
Pet food is the genuinely new entrant, nearly doubling to 31 deals in 2025 and holding through the first half.
What cooled was the pantry. Pantry staples fell to a combined 17 deals across the first two quarters, against annual counts near 50 in prior years. Alcohol eased to 21 first-half deals from a steady low-50s pace, with Fairfax Financial Holdings’ $397 million take-private of the Canadian wine producer Andrew Peller the signature transaction — struck in a category where ready-to-drink and spirits-based formats keep taking share from still wine.
ONE DEAL IS NOT A MARKET
THE MAJORS ARE THE SUPPLY
Platform creation slowed; the installed base absorbed the capital.
Add-ons made up 54% of food and beverage buyouts in the quarter — 33 add-ons against 28 platform buyouts — with another 52 transactions arriving as private equity growth or expansion rounds.
That mix rewards a specific kind of sponsor: one that already owns a platform and has a live acquisition pipeline. It penalizes anyone underwriting a fresh platform at current prices.
Geography is rebalancing at the same time. North America and Europe were effectively level at roughly 50 deals each in the quarter. Europe drew ahead for the full year 2025, at 224 deals against North America’s 189, after North America had led the segment every year since 2020. Asia was thin at five deals, its weakest quarter in recent years, down from a 10-to-16 range held over the prior six quarters.
One number, two readings.
The segment’s headline counts deserve a caution. PitchBook’s narrative cites an estimated 161 food and beverage CPG deals in the second quarter and 319 through the first half; its summary table, which reports observed rather than estimated activity, shows 113 for the quarter and 138 for the first quarter.
The gap is the usual private-markets reporting lag, and it is why quarterly deal counts should be read as a direction rather than a measurement. Value tells a cleaner story: roughly $22 billion deployed through the first half against approximately $55 billion for all of 2025, with the disclosed figure driven by a handful of large transactions in both periods.
The exit door cracked open.
Exit activity gave sponsors more to work with than deployment did, though the count did not show it. Food and beverage CPG exits fell to 20 in the quarter — 10 strategic acquisitions, eight sponsor-to-sponsor buyouts and two public listings — down from 31 in the first quarter and 40 a year earlier.
The composition mattered more than the count. Danone acquired the Australian beverage brand Made Group from its sponsor for roughly $2 billion in the quarter’s largest strategic exit, a public strategic paying a premium for a scaled, category-leading asset. Suja Life, the U.S. functional-beverage company, listed publicly in a roughly $624 million IPO in May, ending a run of several quarters in which no food and beverage CPG company had gone public. And IRCA cleared sponsor-to-sponsor at $3.5 billion.
PitchBook cautions against reading a durable IPO reopening into two listings, while noting the trajectory favors sponsors holding 2022- and 2023-vintage assets. What the listings establish is narrower: scaled consumer assets can find a public bid.
What sets up the second half.
The carve-out pipeline is widening, and it is coming from the public market.
Keurig Dr Pepper will separate into distinct beverage and coffee businesses after closing its roughly $18 billion acquisition of JDE Peet’s. Hormel is divesting its Brazilian and whole-bird turkey operations. Conagra has signaled portfolio reshaping, and Nestlé continues to simplify.
Large public food companies are therefore doing two things at once: shedding assets that create sponsor supply, and bidding up the category winners they want to own. Danone’s premium for Made Group is the second half of that trade.
Input costs are moving in the sponsors’ favor where it matters most. Cocoa is normalizing and green coffee is deflating, which management teams expect to feed a margin recovery phasing through the second half into 2027. A fresh leg of energy, resin and freight inflation tied to Middle East disruption and tariffs is the offset.
PitchBook’s analysts describe the crosscurrents as making reported margin an unreliable guide this quarter, and would build the deal case on cash generation and recovery in unit volumes instead.
Operator Move
Ask which layer of the value chain your business occupies, and whether a strategic buyer would pay for the brand or for the capability behind it. If the answer is capability, document it: proprietary formulation, contracted supply, plant utilization, specification, food-safety record.
Prove sell-through — velocity by door, repeat purchase, contribution margin by channel — before financing national distribution.
Track gross-to-net deductions and promotional dependency as primary metrics, not footnotes.
For chocolate and coffee exposure, model the cocoa and green-coffee normalization separately from the energy, resin and freight offset. Reported margin blends them and hides both.
Estimated and reported deal counts diverge by roughly a third in the current quarter. Read value and mix; treat count as provisional.
Where We Read the Quarter Differently
PitchBook writes for sponsors deciding where to deploy. Our readers are operators and the lenders behind them, and the same data supports different conclusions.
1. The supply base is being levered. Price your inputs accordingly.
PitchBook treats ingredient-layer concentration as a place to deploy capital. For an operator it is a cost-of-goods forecast.
IRCA at $3.5 billion and Highland Baking at $810 million are now sponsor-owned. Median net debt in food and beverage buyouts has held near 4x EBITDA, which means these suppliers carry return requirements and debt service that their predecessors, in many cases family or strategic owners, did not. A consolidating supplier with fixed obligations does not absorb input volatility on a customer’s behalf.
We would expect firmer pricing, longer minimum-volume commitments, tighter change-order terms and less flexibility at renewal. Any operator dependent on a single co-manufacturer or ingredient supplier in a consolidating category should be renegotiating that agreement now, while it still has time rather than a deadline.
2. Falling input costs deserve a look from the collateral side, not only the margin side.
Cocoa normalization and green-coffee deflation are reported as a margin recovery phasing into 2027. Borrowers have a second exposure to the same trend, and it runs the other way.
Where a facility advances against inventory, a sustained decline in input costs can reduce the value of that collateral and narrow availability while the margin benefit is still working through. Whether it does, and to what degree, is facility-specific: it depends on the basis of the inventory advance rate, appraisal timing, caps and sublimits, and how much of the borrowing base inventory represents at all.
The point is not that the effect is uniform, because it is not. It is that the exposure points opposite to the margin story, and the source report does not address it, being written for equity investors rather than borrowers. Operators carrying meaningful inventory in the base should ask their lender how a sustained input-cost decline would flow through availability, and get the answer before the next appraisal rather than after it.
3. A closed equity bid is not a verdict on the business.
PitchBook is underweight brand-level functional beverages and vitamins and supplements, citing five and six first-half deals respectively against thin activity, despite demand that is not in question.
We read that count differently. Sponsor deal count measures who is buying. It does not measure whether a business generates cash, holds its customers or services its debt. A category can be uninvestable to a fund with a five-year horizon and entirely sound as an operating business.
The implication is capital structure rather than viability. Where the equity exit has closed for the time being, the correct response is to finance toward cash-flow independence and stop treating the next round as a milestone. Companies in these categories should be extending runway through working-capital facilities and disciplined trade spend, not through a raise that the data says is not available.
4. Segment deal value will not support a valuation argument.
Global food and beverage CPG deal value of $9.7 billion rested on two transactions, and a single deal supplied roughly 57% of disclosed exit value in the segment.
At that width, quarterly segment value is not a comparable. We would not put it in front of a board or a lender as evidence of what a middle-market business is worth. The usable series are category deal count and the public comp dispersion, each of which describes a population rather than a handful of headline deals.
We also publish both counts for the quarter, the estimated 161 and the reported 113, because the roughly one-third gap between the two figures is material, and readers are entitled to know the number is provisional.
This is the most useful data in the quarter and it is easy to read past. Multiple expansion fell from roughly 58% of food and beverage buyout profit in the 2013-2018 vintages to about 16% in 2021-2025, while median net debt held near 4x and entry multiples returned to 10.4x.
A sponsor paying that price with that leverage and no exit-multiple tailwind needs operating improvement to clear its return. Two consequences follow for anyone selling.
The bid will be more sensitive to demonstrated margin than to growth narrative, which favors sellers who have already done the unglamorous work on pricing, procurement and gross-to-net. And rollover equity is worth materially less than the headline valuation implies, because its value now depends on operating improvements the buyer is relying on the seller’s own team to deliver post-close. Rollover should be priced as the equity risk it is, not counted at face value in the consideration.
6. The carve-out pipeline is a competitive event, not only deal flow.
Keurig Dr Pepper’s separation, Hormel’s divestitures and simplification at Conagra and Nestle will release established brands into sponsor hands. The sell-side reads this as supply.
For a middle-market operator it also reads as competition. Those brands arrive with existing shelf position, a transitional-service cost structure that will understate their true operating cost for 18 to 24 months, and new owners who need volume to service acquisition debt. We would expect more competition for the same co-manufacturing capacity, more promotional intensity in shared categories, and a period in which a carved-out competitor can price in ways its steady-state economics will not ultimately support.
Plan for the promotional pressure through 2027, and treat any co-man capacity commitment you rely on as something to secure now.
What Would Change Our Mind
On the Supply Base
On the Closed Equity Bid
On the Returns Math
Market Overview
Venture Capital: Record Dollars Narrow the Door
U.S. venture funding reached $412.7 billion in the first half, but a small number of companies took most of it. Artificial intelligence attracted $355.9 billion, or 86% of the market.
Market Overview
Private Equity: The Holding Period is the Investment
U.S. private equity did not stop transacting in the second quarter. It moved down in size and up in selectivity.
Lead Overview
IPO: The Window Is Open; the Guest List Is Short
The SEC counted 99 IPOs raising more than $22 billion in the first quarter, against 84 raising $11.8 billion a year earlier, plus 264 registered follow-ons raising $44.2 billion.
Market Overview
Mergers
& Acquisitions
A Tall Market, Not a Broad One
PwC counted approximately $1.2 trillion of announced U.S. deal value in the first five months of 2026, against $603 billion in the comparable 2025 period.
Volume declined 4%. Thirty-nine transactions of $5 billion or more supplied roughly 64% of the total.
Market Overview
Capital
& Credit Indicators
