M&A activity snapshot
E-commerce brand M&A grew in 2025 even as the wider consumer market shrank. Capstone Partners reports e-commerce sector M&A rose 12.8% to 97 transactions in 2025, with strategic buyers rising 26.4% to 67 transactions while private equity fell 9.1% to 30. Houlihan Lokey counted 79 e-commerce and D2C transactions in Q1 2025 alone.
Online keeps gaining share of spending. E-commerce was 17.1% of total U.S. retail sales in Q2 2026, growing 12.2% year over year against 6.7% for all retail.
The market still carries scars from the Amazon aggregator cycle. Aggregators raised $12.3 billion in 2021, 75% as debt, and by 2024 Marketplace Pulse reported practically none of them were still growing through acquisitions.
Who is buying
Strategic consumer companies. They drove 2025 volume and paid the headline prices for brands with real demand. e.l.f. Beauty agreed to buy rhode, a brand built direct to consumer, for $800 million of consideration payable at closing plus a potential earnout of $200 million. Church & Dwight agreed to buy Touchland for $700 million at closing plus up to $180 million contingent on 2025 net sales.
Church & Dwight published its screen in the same release: #1 or #2 brand in a category, asset-light, growing, and gross margin accretive. That list is a fair summary of what most strategic buyers want from a DTC brand.
Private equity and growth equity. Sponsors remain buyers but were less active in 2025, with PE deals down 9.1%. They favor profitable brands with several channels over high-growth, cash-burning ones.
Marketplace brand operators. Former aggregators and Amazon-focused operators still exist but buy selectively. Pattern Group, a public Amazon-centric brand partner, derived 93% of its 2025 revenue from consumer product sales on Amazon.
What buyers look for
Houlihan Lokey's buyer checklist is blunt: the main buyer focus is on top-line growth, gross and EBITDA margins, and customer economics, and buyers are only interested if these KPIs look attractive. Its KPI list includes repurchase rate, lifetime value to acquisition cost, paid versus unpaid traffic, cohort churn, return rate, and average order value.
Customer acquisition cost is under more scrutiny since tracking changes. The Honest Company's 10-K says Apple's 2021 change letting users opt out of activity tracking across devices has impacted and may continue to impact our business, and that its paid advertising cost rose with industry-wide price increases.
Channel concentration is the first risk buyers price. Marketplace fees are a large line in a brand's contribution margin: Amazon's 10-K shows third-party seller services revenue of $172,162 million and advertising services revenue of $68,635 million in 2025, much of it paid by brands. Many DTC brands now sell mostly through retailers. Honest's three largest retailers, Target, Amazon and Walmart, made up approximately 30%, 34% and 9% of 2024 revenue.
Compliance shows up in diligence too. The FTC's 2024 rule prohibits the sale or purchase of fake reviews and allows civil penalties against knowing violators. For subscription brands, the federal click-to-cancel rule was vacated by the Eighth Circuit in July 2025, but California still requires cancellation in the same medium the consumer used to sign up.
What makes a strong company
A DTC brand that draws strategic interest typically shows:
- Cohort data proving repeat purchase, with contribution margin after marketing and fulfillment reported by channel.
- No single channel, including Amazon or one retailer, carrying most of revenue.
- A meaningful share of traffic from organic, email, and returning customers rather than paid ads.
- Gross margin high enough to be accretive to a strategic buyer, one of Church & Dwight's stated acquisition criteria.
- Clean review practices and state-compliant subscription cancellation flows.
- Inventory and supplier terms that do not depend on the founder.
Valuation and deal structure
Capstone puts e-commerce M&A multiples at an average of 12.0x EV/EBITDA from 2022 through 2024, nearly a turn above the 11.1x consumer average. That premium is recent: from 2018 to 2021, the sector averaged 10.2x against 11.7x for consumer.
Fast-growing brands bought by strategics are often priced on revenue. e.l.f.'s price at closing was approximately 3.8x LTM net sales of $212 million. Touchland's trailing twelve-month net sales were approximately $130 million against $700 million paid at closing.
Earnouts are standard in these deals. rhode's terms include a potential earnout of $200 million, and Touchland's include up to $180 million contingent on 2025 net sales. Marketplace sellers face a different market. Thrasio co-founder John Hefter has said Thrasio started buying at 2x EBITDA when competition was scarce and was paying 7x by the peak, pricing that preceded its restructuring.
Outlook
Expect strategic buyers to stay the main exit for DTC brands through 2027. They want brands with proven demand that fit their retail distribution, and Capstone's 2025 data shows them gaining share of deal volume while private equity pulls back. Online sales growth, at 12.2% in Q2 2026, keeps the category attractive.
The gap between brand types will likely widen. Diversified brands with retail distribution and strong repeat rates will get strategic bids and earnout-heavy structures. Single-channel marketplace sellers will face a thinner buyer pool and lower multiples.
Own an e-commerce or DTC brand and want a market-data starting point? Run the valuation tool, or see the broader Consumer & Retail M&A overview. For how buyers run outreach to brand owners, read proprietary M&A deal flow.