On the latest episode of Behind the Buyouts, Nathan Pund, global head of outdoor, active lifestyle and tactical industries at Houlihan Lokey Inc., dove into the highs and lows these sectors have experienced since the pandemic and the subsectors that continue to draw investor interest amid shifting consumer interests.

While outdoor activities blew up during Covid-19 lockdowns, there’s since been a split in growth between hard goods such as bikes and fishing equipment that struggled to get through excess inventory and soft goods such as apparel and footwear that fared better due to their consumable nature. Fitness, too, had its share of woes, with high-value, low-price brands such as Planet Fitness Inc. (PLNT) rebounding well from lockdowns and boutique brands such as Roark Capital Management LLC holding Orangetheory Fitness still grappling with lower foot traffic.

But as interest rates come down and companies work through an inventory overhang, the market is poised for greater M&A in 2025, particularly in certain subsectors.

“We’re seeing a lot more confidence that now we’ve gotten through all the supply chain challenges that came from Covid,” Pund said. “We’re in market with a number of businesses now and have been approached by a number of founders and private equity owners about selling their businesses in 2025 — I think 2025 is going to be an exceptional year for our category.”

Houlihan’s outdoor team has advised on deals such as the sale of German health and fitness platform LifeFit Group GmbH to Oaktree Capital Management LLC in June, the sale of watersports brand Bote LLC to Seawall Capital LLC platform Kent Water Sports LLC in 2022 and the 2020 acquisition by Vista Outdoor Inc. (VSTO) of the ammunition and accessories businesses of Remington Outdoor Co.

Check out the podcast with Nathan Pund below:

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