By: Vance Saunders, CPA, Managing Director
­Downstream Energy & Convenience Retail Investment Banking Group

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Mergers and acquisitions (“M&A”) activity increased significantly in 2025 in the fuels distribution and convenience retailing (“FDCR”) industry in comparison to a below average year in 2024. Valuations remained strong for high quality assets, as buyers competed aggressively for attractive growth opportunities. Looking ahead, we anticipate transaction activity will continue to increase in 2026 with valuations remaining strong as demand outweighs supply in the M&A market and more favorable energy policy, tax policy, and interest rate environments continue to buoy M&A in the industry. In this article, we’ll examine the 2025 activity in the U.S. and discuss the factors that will drive market activity and valuation over the next year.

2025 Year in Review

While the number of 2025 transactions, based on the criteria noted in the chart above, was just shy of the 10-year average (36), transaction activity increased 25% from 2024, with 35 deals closing. Uncertainty around the 2024 elections and their impact on the petroleum industry along with higher interest rates led to subdued M&A activity in 2024; however, 2025 saw sweeping reforms to a number of important policies that are very favorable for M&A activity overall and in particular for the FDCR industry. Deal activity picked up significantly in Q3 and Q4 of 2025 after the One Big Beautiful Bill (“OBBB”) was passed in July. Additionally, credit spreads tightened and overall borrowing costs declined while strong fuel margins drove another year of near record profitability for many companies in the industry despite challenging in-store merchandise sales trends. Demand for high quality assets remains very high, and competition among bidders for good companies continues to support attractive valuations for sellers in the market, although the amount of competition still varies by geography, asset quality, and transaction size. This demand for growth opportunities among strategic buyers coupled with extremely favorable tax and energy policy changes creates an environment where both buyers and sellers are able to achieve attractive valuations to meet exit and growth objectives.

Similar to the last few years, M&A transactions in 2025 were spread among many unique buyers, with at least 26¹ different buyers across 35 transactions. The ratio of unique buyers is down slightly from 2024 when 28 deals were completed by 26 unique buyers as a few of the larger consolidators completed multiple acquisitions in 2025. Notably, 15 of the 35 deals represented the first acquisitions by the buyers in these transactions in at least the last 10 years and in some cases their first major acquisitions ever, further demonstrating the breadth of the buyer pool and wide-spread interest in growth among regional operators.

¹Two of the transactions recorded in 2025 involved multiple, undisclosed buyers

Several large deals also occurred in 2025, with Sunoco taking the prize for the largest transaction with its acquisition of Canada-based Parkland Corporation, which included its sizable U.S. operations. After focusing on the expansion of its terminaling and midstream assets for the last several years, Sunoco invested heavily in FDCR in 2025 completing the most transactions during the year and becoming the largest independent fuel supplier in North America. The largest U.S. transaction was Alimentation Couche-Tard’s purchase of  Giant Eagle’s GetGo convenience stores, a transaction that Matrix advised on. Nouria Energy entered the Southeast with its acquisition of the Enmarket stores, while other well-known marketers expanded significantly within or adjacent to their existing footprints. While Mega Saver may have been a lesser-known company at the beginning of the year, they acquired 52 stores last year in two transactions that nearly quadrupled their store count by year’s end. Also notable is that four of the deals in the table below occurred in California, which led the nation in number of transactions for the year.

The highly talked about potential deal between Circle K and 7-Eleven was aborted in July 2025, with 7-Eleven planning an IPO for its North American business sometime in the 2^nd half of this year. If successful, this may allow 7-Eleven to play a larger role in acquisitions in the years ahead.

Outlook for 2026

We expect 2026 to be an above average year for transaction activity with valuation multiples remaining strong for high quality companies. A number of tax law and energy policy changes as well as broader economic themes have increased optimism about the future of the industry and created a more attractive environment for both buyers and sellers. While there are certainly challenges facing the industry the headwinds that exist and privately-held company generational transition pressures will likely inspire some companies to exit while helping others achieve growth to mitigate the same issues.

There are many factors that we expect to drive transaction activity and valuation in the industry in the year ahead, the most significant of which can be summarized below:

Fragmented, mature industry with aging ownership; operational challenges

• Generational issues exist for many business owners who do not have a transition plan, or families may choose a liquidity event to diversify family wealth and pursue the other interests of the next generation.
• Widening gaps in the quality of offerings, operational capabilities, robust loyalty programs and store profitability between larger operators and smaller and mid-sized companies are making it harder for some companies to remain competitive and maintain market share.
• Achieving scale, developing strong store brands, and investments in technology are important to remain competitive in a changing landscape, and many owners are choosing to exit rather than making the significant investments required to revamp their businesses.
• Many companies with multiple business lines and/or divisions (e.g., wholesale fuels, retail stores, commercial fuels, propane, etc.) are choosing to divest certain divisions to reallocate capital to the businesses where they have the most favorable competitive advantages and returns on capital.

Tax and energy policy changes

• The OBBB, passed on July 4, 2025, reinstated and made permanent the 100% bonus tax depreciation for qualified assets in the year of acquisition, which was previously scheduled to step down to 20% this year before completely sunsetting next year. This higher bonus depreciation means buyers can pay more for an asset while achieving the same after-tax returns on their investment. The OBBB also permanently increased the basis on which the interest expense limitation is calculated and made permanent other important tax provisions which were set to sunset such as the 37% top individual income tax rate, the Qualified Business Income deduction for pass-through entities, and the unified estate and gift tax credit. The law also increased the gain exclusion on the sale of Qualified Small Business Stock.
• The Trump administration has also implemented several other policy changes that are beneficial to the FDCR industry, such as eliminating the EV mandate for auto makers, eliminating tax credits for EVs, and significantly lowering CAFE standards for new vehicles and eliminating the penalties for non-compliance while also seeking to reduce or eliminate federal funding for EV charging infrastructure. The administration has also sought to increase domestic oil production by eliminating certain restrictions, reducing regulatory burdens, and lowering production costs for domestic producers.

Fuel volumes and margin trends

• Despite the recent policy changes noted above, motor fuels gallons are expected to continue to decline. The average age of the fleet of U.S. cars and light-duty trucks reached another all-time high in 2025, and these older vehicles will eventually be replaced with newer, more fuel-efficient internal combustion engine vehicles and EVs. Additionally, auto makers are unlikely to significantly change course from their goals of increasing fuel efficiency since the next administration may reinstate more stringent requirements.
• Although fuel volumes have continued to decline, national average gasoline fuel margins for 2025 ticked up very slightly to 40.0cpg, essentially flat from the last two years with 39.7cpg in 2024 and 39.4cpg in 2023 and just a few cents below 2022’s record of 42.9cpg². Industry participants generally acknowledge the structural shift that has occurred post-pandemic and the “new normal” fuel margins, which are expected to continue to increase consistently with historical trends as the increased margins are needed to offset inflationary operating expenses and reduced fuels volumes, especially as inside sales and gross profits have not kept up with inflation for many operators. Breakeven fuel margins for marginal operators continue to increase, allowing sophisticated operators to see even more bottom line benefit from higher margins.

Demand for acquisitions remains very strong, with several factors bolstering valuations

• There are many companies with aggressive growth goals, both public companies and regional operators. Public company CEOs continue to discuss their aggressive growth goals, noting acquisitions will comprise a significant part of those goals, and we continue to see strong interest from regional marketers that are successfully building brands to rival any of the larger companies.
• Many companies view acquisitions as faster, less expensive, and often less risky for achieving growth targets than building new stores as the costs and project lead times for building new-to-industry sites continue to increase.
• Strategic buyers have significant synergies when acquiring other companies in the industry, and as consolidation continues, more regional companies are achieving the sophistication and scale to take advantage of higher levels of synergies to compete with large consolidators for acquisitions.
• Several years of strong cash flows have allowed buyers to build a war chest of capital for acquisitions, and there is plenty of debt and equity capital available.
• Refiners are aggressively pursuing ways to secure guaranteed throughput of branded gallons for their refined fuel long term. Their willingness to pay marketers significant amounts through up-front funds or rebates over the life of the fuel supply contract, enter into joint venture agreements or invest other forms of capital to help grow downstream businesses willing to commit to their brand, has been helpful to marketers making acquisitions that are open to partner with branded refiners.
• The industry is viewed as being recession resilient and an attractive investment for private companies and institutional investors as differing views about our economic outlook create future uncertainty.

² Source: OPIS Retail Fuel Watch

Conclusion

There are significant tailwinds for M&A in the FDCR industry going into 2026. Barring a significant economic downturn, we expect transaction activity to increase and valuation multiples to stay relatively in-line with or slightly higher than in the last few years. Buyers will continue to compete aggressively to acquire companies with high quality assets, while lower quality assets may garner less buyer interest, and therefore lower valuations. Given the continued trend in federal deficit spending and economic uncertainty around AI and other issues, some sellers may accelerate their longer-term exit plans feeling there may be a window of opportunity that could be closing, especially the opportunity to take advantage of the lowest tax rates in U.S. history. Others will take a more bullish view of the industry recognizing its importance as an essential part of consumers’ daily lives and its past resilience to downturns. Overall, 2026 is expected to be an excellent environment for both buyers and sellers in M&A transactions.

 

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