Logistics and supply chain M&A activity falls in Q3, BDO finds
According to BDO, figures for the third quarter were at their lowest level since 2018, with 12 deals completed between July and September, against 15 in Q2
M&A activity in the UK logistics and supply chain management sector has fallen for the third successive quarter, having previously hit a record high in Q4 2021. According to BDO, activity for the third quarter was at its lowest level since 2018, with 12 deals completed between July and September, against 15 in Q2 and the record high of 20 in Q4 2021.
According to a new report from BDO, private equity activity in the last quarter also fell, although the influence of investors was “still prevalent” as acquisitions were being made by PE-backed businesses.
The UK and Ireland M&A Update Q3 2022 – Logistics and Supply Chain Management report also found that deal value increased during the third quarter of the year. However, this was distorted by the takeover of John Menzies plc by Agility for £0.8bn.
Jason Whitworth, M&A partner at BDO, said: “Transaction levels in the logistics and supply chain sector have been under significant pressure for some time and the latest figures are testament to an increasing note of caution amongst leading decision makers across the sector.
“Our recent BDO-Barclays Logistics Confidence Index saw the score slip from last year’s highly optimistic score of 62.5 to 50.4. This reflects a sense of realism in the market as it readjusts to the challenges of high inflation, soaring fuel and energy prices and a more uncertain economic landscape.”
He added: “Interestingly, despite these challenges, mergers and acquisitions continue to be a strategic priority for logistics companies, with 45% of respondents reporting that they were likely to make an acquisition in the next 12 months – the highest figure ever recorded in the survey’s 10-year history.
“Operators are clearly seeking to achieve economies of scale and expand their service offering, ingraining a trend for consolidation into what remains a fragmented industry. However, the levels of uncertainty in the current market are making deal do-ers cautious, particularly around valuing future earnings. Buyers are nervous of overpaying, as a market shifting with fragile consumer confidence means future market share post-acquisition is difficult to predict.”
Standout deals in Q3 included Marks and Spencer Group PLC’s acquisition of Gist Limited; Mandata’s acquisition of Eureka Information Systems; the sale of World Options to MBE Worldwide; Aurrigo International’s IPO on AIM; BGF’s £15m investment in ITD Global; and Carousel Logistics’ acquisition of Alltrans.
