Logistics M&A remains “lively”, with strong deal flow forecast to continue

In an update on UK logistics and supply chain M&A activity, accountancy and advisory firm BDO has said dealmaking in the sector remains “lively”, despite dropping last year from the record levels seen during 2021. BDO’s report on logistics M&A showed that 17 deals were completed during Q4 2022, following three consecutive quarters of declining activity.

Overall, 62 deals were completed in the UK logistics sector last year, down from 66 during 2021, with total disclosed deal value standing at over £3 billion. Despite the fall from 2021, a year which saw a considerable amount of pent-up activity, BDO said that both deal volume and value remained strong.

The latest update highlights numerous trends currently influencing logistics M&A, with 60 per cent of deals being cross-border transactions (the highest figure since 2016) as more international buyers entered the sector, and a quarter of all deals during 2022 involving private equity backing.

Q4 saw several major deals, including DFDS’s £138 million acquisition of Northern Ireland-based haulage firm McBurney Transport and EFS Global Ltd’s acquisitions of Floryn Ltd and Eminence Transport Ltd. There were also three acquisitions of cold storage logistics firms during the quarter, as the UK’s food supply chain infrastructure became a more prominent consideration. This is a trend that has continued into 2023, with HSH Cold Stores’ recent £16.5 million acquisition of Associated Cold Stores & Transport.

Commenting on the findings, BDO M&A partner Jason Whitworth said: "Considering 2021 was bolstered by pent-up deal demand following Brexit, deal volumes last year reaffirm that the sector remains a lively one for M&A. Total disclosed transaction value fell in Q4, reflecting a shift to smaller deals. However, the annual deal value remained high, incorporating a number of high value transactions and reflecting the continued appetite for large scale consolidation."

"Whilst we continue to see strong appetite for strategic acquisitions and consolidation, the current uncertainty around the economic outlook and future financial performance is prompting more caution in the approach of buyers to value, with an increased focus on sustainability of earnings and margins. Aligning vendor and buyer expectations as to valuation remains key and higher valuations are narrowing in on the higher quality strategic assets."

In BDO’s latest annual Logistics Confidence Index with Barclays, the firm found that 45 per cent of logistics firms were planning to make acquisitions over the coming year, despite confidence falling within the sector, as operators looked to gain scale, expand their service offering and geographic presence and increase tech uptake.

Jason Whitworth said that Q4’s increase in activity bore this out and added: “We are anticipating that this strong deal flow will continue in the year ahead; however, with the uncertainties in the economy and the ever-evolving landscape, we anticipate that the mix in the nature and value of these deals will change."


Also read: the factors driving an influx of international buyers into the UK M&A market.

How companies can use M&A to tackle supply chain problems

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