BREAKINGVIEWS-Discounted deal duo herald M&A reset

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Jonathan Guilford

NEW YORK, Jan 23 (Reuters Breakingviews) - Dealmakers have been lamenting for years now about stubborn valuation gaps between buyers and sellers. In particular, it has been takeover targets clinging to their post-pandemic heydays. Fresh acquisitions by Capital One and Clorox suggest the impasses are finally breaking.

After the worst of Covid-19, both public and private markets boomed. Brex was among the startup crowd to benefit. The fledgling credit card issuer of choice for tech ventures secured an investment in 2022 that implied it was worth more than $12 billion. A series of interest rate hikes, however, swiftly deflated much of Silicon Valley. By early 2025, down-rounds, or money raised at a lower valuation than the last time, reached a decade high, according to PitchBook.

There also was no better time to be hawking hand sanitizer than as a deadly virus spread around the world. Family-owned GOJO, the Purell producer, eventually sought to capitalize by exploring a sale in early 2023, Reuters reported. It wanted a premium multiple of about 20 times trailing EBITDA.

Although bleach maker Clorox CLX.N, which itself was trading at more than 20 times EBITDA in 2023, is snapping up GOJO for roughly the same $2 billion price tag it had been seeking, the valuation equates to the 12 times that the buyer now also commands. Brex, despite touting reenergized 50% growth, is being heavily discounted, too, with credit card giant Capital One COF.N paying just $5 billion or so, at a similar multiple to its $500 million of net revenue where buy-now-pay-later provider Affirm has tumbled.

The two deals make strategic sense, with Clorox adding a popular brand to its portfolio and Capital One filling a niche that might plug into its newly acquired Discover payment network. More importantly for investment bankers, however, is the long-awaited meeting of the minds. Mega-deals dominated the M&A market in 2025 as the number of transactions declined. A broader reset for valuation expectations would give both counts a boost.

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CONTEXT NEWS

Credit-card issuer Capital One said on January 22 that it would buy Brex, a startup rival focused on the corporate market, for about $5.2 billion in cash and shares.

Cleaning products maker Clorox said on the same day it had agreed to acquire Purell maker GOJO Industries for about $2.3 billion in cash.

Bank of America is advising Capital One while Centerview Partners advises Brex and Clorox. Harris Williams is advising GOJO.

(Editing by Jeffrey Goldfarb; Production by Maya Nandhini)

((For previous columns by the author, Reuters customers can click on GUILFORD/ Jonathan.Guilford@thomsonreuters.com))