After a pandemic boom and a multi-year slowdown, pet sector dealmaking may finally be getting its bark back, according to industry sources.

Following a slump that began in mid-2022 – driven by slowing growth, rising interest rates, and added tariff pressures – easing macro conditions and a backlog of exit-ready private equity-owned companies are expected to birth a whole litter of more deals, the sources said.

A resetting of valuation expectations is also contributing to the improving outlook.

The pet products and services sector experienced a robust level of activity in 2021, stemming from the large increase in pet adoptions during COVID. But a deceleration began in mid-2022 as pet companies’ growth moderated and interest rates rose sharply, said Carol Frank, managing director of BirdsEye Advisory Group.

“These past few years have represented the first meaningful slowdown I’ve seen in my 16 years as a pet-focused M&A advisor,” she said.

Other headwinds include declining rates of pet adoption, consumer price sensitivity, meaningful increases in cost of goods due to tariffs and inflation, and rising labor costs, said Aarti Kapoor, managing director at Cascadia Capital.

North America’s pet products and services sector recorded just 43 deals in 2025, Mergermarket data shows, the lowest total since 2015 and just over half the record 80 reached in 2021. The data excludes veterinary services and pharmaceuticals.

Source: Mergermarket, data correct as at 16 Mar 2026

Collaring opportunities

A growing acceptance of lower valuation multiples, combined with improving financing conditions and a backlog of PE-backed pet companies seeking exits, is helping revive deal activity in the sector.

“The powerful combination of dry powder, more favorable macroeconomic conditions, easing margin pressures, increased operational visibility, and robust long-term tailwinds for the pet category is setting up the industry for an active year of M&A and capital raising ahead,” Kapoor said.

Just as in the food and beverage sector, investors in the pet food space are paying close attention to concepts that align with clean, better-for-you trends, such as products that are minimally processed and use gentler forms of production to retain nutrient quality, the sources noted.

Pet supplements are also drawing strong investor interest, thanks to the category’s robust growth trajectory, multiple long-term drivers, and the “incremental” value they can offer large-cap strategics who could be eventual acquirers, Kapoor said. Supplement companies such as Pet Honesty, Native Pet, and Wuffes are among those closely watched by institutional investors, she added.

Buyers are looking for products that address specific health needs such as gut health, longevity, cognitive function, joint support, and anxiety, Frank added.

“I am seeing the strongest interest in science-backed, research-driven products across food, treats, and supplements,” she said. “The days of general wellness positioning alone commanding premium valuations are largely behind us.”

Out of the doghouse

Pet companies focused on cats are also drawing heightened interest, said Frank Petraglia, KPMG’s Global and US head of Deal Advisory & Strategy for Consumer, Retail and Hospitality. Strategic buyers and private equity firms are increasingly viewing cat-centric brands as a way to capture strong growth in a less crowded market, BirdsEye’s Frank noted.

The surge is partly driven by post-COVID increases in cat ownership, as cats are often seen as lower-maintenance household pets, Petraglia said.

“Historically, innovation in the pet sector has been disproportionately focused on dogs, but that is changing rapidly,” added Frank. “The cat category remains underpenetrated from a premiumization and innovation standpoint.”

Also, while brick-and-mortar sales in several categories have flattened, particularly in discretionary and durable goods, omnichannel brands with a profitable direct-to-consumer (DTC) component are receiving greater interest, Frank said.

“We are also seeing increased international expansion activity. U.S.-based brands that have built strong domestic platforms are increasingly looking to scale into Europe and Asia, either through partnerships or acquisition,” she added. “Cross-border strategic interest remains meaningful, particularly for premium consumables.

Hunting for high-value deals

Three months into the new year, pet strategics have already been more active in making acquisitions compared to last year. Notable pet deals announced so far in 2026 include Nasta Pet Food’s acquisition of FirstMate Pet Foods and Agrolimen’s acquisition of Ollie Pets for USD 600m.

Mergermarket has reported on several pet product companies currently in or coming to market. They include the ongoing sale process for family-owned pet food company Weruva, AUA Private Equity’s bake-off for the potential sale of its portfolio company Westminster Pet Products, Apax Partners’s potential sale of portfolio company Nulo Pet Food, and the potential sale process for founder-owned Honest Kitchen, a maker of high-quality pet food.

Having previously received EBITDA multiples in the mid-20s or higher during the peak of the market, the best pet consumables companies are now transacting in the mid-teens to low-20s EBITDA range, depending on growth, scale, and differentiation, BirdsEye’s Frank said.

“While multiples have come down from peak levels, pet remains one of the most attractive and resilient sectors within consumer,” she concluded. “High-quality assets continue to receive strong interest and attractive valuations.”