Pet M&A deals slow, but stronger valuations could revive activity

The total value of mergers and acquisitions in the US market fell 13.3% year over year (YoY), from $226B (€196B) in Q1 2025 to $196B (€170B) in Q1 2026, according to the Pet Industry Insights – Summer 2026 report by investment bank Cascadia Capital.

In deal counts, the fall was steeper: it went from 4,211 to 3,402, a 19.2% decrease. This means that the average deal value went up: EV/EBITDA valuation multiples increased from an average of 11.4x in 2025 to 12.1x in 2026.

The ratio between enterprise value (EV) and earnings before interest, taxes, depreciation and amortization (EBITDA) is now reflecting pre-pandemic norms, the bank says, despite the fluctuations. Investors are becoming more selective but also willing to pay more for the right deal.

What it means 

In the pet market, 2026 multiples “are expected to revert to longer-term averages after valuation multiple compression in 2023-2025,” authors Aarti Kapoor, Managing Director, and Bryan Jaffe, Head of M&A, explain. 

This is driving renewed investor interest among owners considering the sale of their companies, “particularly for assets that have been aging in sponsor portfolios for 5+ years,” they add. 

Based on a database of over 175 industry transactions since January 2010 with disclosed or proprietary estimated transaction values, the bank estimates animal health as the category with the highest EBITDA multiples (19.2x) over this period, followed by veterinary (17.3x), retail (13.6x), consumables (12.5x) and products (8.8x).

 

Another factor that could support a recovery in deal activity during 2026 is that companies now have greater visibility after navigating difficult market conditions over the past year.

“Operators have greater visibility into their businesses after navigating consumer price sensitivity headwinds, tariff exposure and other [profit and loss] P&L pressures that made valuation conversations difficult between buyers and sellers,” the authors explain.

Sweet spots

The investment bank divides the most promising areas for mergers and acquisitions in the coming quarters into consumables, services and health.

In consumables, major deals closed this year were marked by continued consolidation among producers seeking complementary capabilities. The report highlights the acquisition of fresh dog food brand Ollie by Spanish conglomerate Agrolimen, the acquisition of raw frozen and freeze-dried brand Primal Pet Foods by Canada-based Pure Treats, and I and Love and You’s buyout by Made by Nacho.

According to Cascadia, these transactions reinforced investor interest in the fresh and frozen dog food category, which is also recording sales growth in the US. The category gained percentage points of market share since 2021 and now represents 11% of dog food sales in the country.

Services

The second quarter was marked by prominent transactions in the services area, such as Chewy’s acquisition of Modern Animal in May, Tractor Supply’s purchase of VIP Petcare in the same month, and Great Hill Partners’ growth investment in Woof Gang Bakery & Grooming in June. 

“With urbanization, return-to-office and other supportive tailwinds, and a highly fragmented category with only a handful of scaled assets, pet services are now a growing area of focus for the investor community, given long-term growth prospects and the opportunity for both corporate-owned and franchised growth business models,” the report analyzes.

Covetrus’ merger with MWI Animal Health, the animal health division of the pharmaceutical solutions company Cencora, was the biggest deal in the animal health segment in Q1. But with owners focusing on preventive healthcare and pet wellness, the supplements category can enter the spotlight, the bank says.

Other markets

In the global context, investment bank R.L. Hulett analyzes deal activity in the sector by considering “products and services for companion pet and non-companion animal space.”

In its global analysis, R.L. Hulett reports that sector M&A volume fell 52% in Q1, from 152 transactions in the prior-year quarter to 73.

Europe was the most active region, accounting for more than 4 in 10 deals. It was followed by the US (27.4%), Asia (11%), Latin America (10%), Oceania (5.5%) and Africa (3%).

In terms of subsector, pet products saw 37 deals (50.7%), pet and animal services reported 17 (23.3%) and veterinary care services registered 6 (8.1%). The remaining 13 (17.8%) transactions were grouped under “other.”

Values on the rise

Despite the drop in numbers, deal value jumped from $0.2 billion (€0.17B) in Q1 2025 to $0.9 billion (€0.77B) in Q1 2026.

“In Q1, we generally saw a shift in mix to larger-sized transactions compared to the prior year,” the bank says, with middle-market and upper-middle tranches gaining space. 

In terms of valuation, there was no uniform direction. The median EV/EBITDA multiple for reported private equity deals decreased from 9.9x to 8.2x, but increased from 8.1x to 8.5x for strategic deals.

Dax Kugelman, R.L. Hulett’s analyst, tells GlobalPETS that the forecast for the rest of the year is more positive than negative. “The COVID-fueled pet spending boom created a larger addressable market, so acquirers are still hunting for consolidation plays even in softer markets,” he concludes.