M&A activity in the UK logistics sector has continued to grow, despite the issues facing the sector and the wider economy, as well as a drop in bigger transactions – with the dominance of smaller deals leading to a decline in disclosed deal value.
According to BDO’s UK & Ireland M&A Update – Q2 2023 report, there were 32 deals in the UK logistics sector during the first half of the year, up by more than 10 per cent compared to 29 deals in the second half of 2022.
H1 2023 was a half of contrasting quarters, with relatively slow activity during Q1, before a strong rebound saw 19 deals completed during Q2. Deals in the second quarter included Netherlands giant Janssen Group’s acquisition of Runcorn firm Maltacourt Global Logistics and the acquisition of Tuffnells Parcels Express’ brand, IP and certain assets out of administration by Shift Group.
2023 has also seen the continuation of two key themes in logistics M&A: the increase in cross-border transactions, which accounted for 35 per cent of deals; and the continuing involvement of private equity, with four direct investments and three deals completed by private equity-backed firms.
BDO M&A Partner Jason Whitworth said: “Following a slow start to the year, deal volumes rebounded in Q2, indicating a continued appetite for consolidation and investment in technology.”
“The low disclosed deal value reflects a raft of smaller, lower value deal completions, compared to ‘big ticket’ transactions, highlighting a continued nervousness in the market to commit to larger investments given uncertainty in valuing future earnings.”
BDO also carried out a poll of industry leaders, with 82 per cent of respondents naming changing levels of demand or volume as the main challenge that their business currently faces. 59 per cent said they were responding to this through investment in technology, such as warehouse automation and autonomous vehicles, as well as using AI and big data in their supply chains.
Whitworth continued: “Tech enablement and ESG certainly dominated equity investment interest this quarter, with venture capital backing four logistics tech businesses encompassing zero-emission delivery services, supply chain decarbonisation, data analytics solutions and workflow productivity.”
“As markets settle, and with more sustained stability, we anticipate growing confidence in pricing which will unlock more transactions over the coming year.”
Read more about logistics M&A:
Logistics firms targeting acquisitions despite falling confidence
Logistics M&A remains “lively”, with strong deal flow forecast to continue
Update December 2023: Logistics M&A grows despite surge in insolvencies
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