Big ticket’ deals fall but M&A activity rises in logistics sector

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Deal activity in the UK logistics and supply chain management sector increased in the first half of 2023, despite a lack of ‘big ticket’ deals in the market.

Transaction volumes in H1 rose by over 10% compared to the second half of 2022, with 32 deals completed from January to the end of June 2023 (29 in H2 2022). After a slow start to the year in Q1, activity rebounded with 19 transactions completed in Q2, according to the latest report from accountancy and business advisory firm BDO LLP.

Despite the increase in activity, the disclosed deal value fell significantly, as smaller deals dominated the market.

Deals included the acquisition of Runcorn-based Maltacourt Global Logistics by Netherlands headquartered Janssen Group, backed by Waterland Private Equity; Shift Group’s acquisition of the brand, IP and selected assets of St Helens-based Tuffnells, following the collapse into insolvency of the ‘Big Green Parcel Machine’; the acquisition of Independent Logistics Solutions by Burnley-based EFS Global; the acquisition of York-based Peter Holmes Haulage by Macclesfield’s I H Jordan Transport Ltd; and Durham-based Hargreaves Services Plc’s acquisition of Greenford Haulage & Aggregates Ltd.

The BDO ‘UK & Ireland M&A Update – Q2 2023’ report also revealed that 35% of deals were cross-border transactions. Seven deals attracted private equity investment, with four securing direct investment and three acquisitions being completed by PE-backed companies.

Jason Whitworth, M&A partner at BDO LLP, commented: “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.”

A poll of industry leaders carried out at a series of sector events hosted by BDO and Barclays Corporate Banking earlier this year, found that 82% of respondents said changing levels of demand or volume was the biggest challenge currently facing their business. In response, more than half of respondents (59%) said that they were focussing investment on technology to drive efficiencies, with wider use of AI and big data in supply chain processes, and the introduction of more automation, including warehouse automation, autonomous vehicles, 3D printing, and the increasing use of drones.

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.”