UK logistics M&A still ‘lively’ despite dip, BDO finds

The UK logistics and supply chain management sector has remained “lively” for M&A, despite deals falling from record levels in 2021, BDO has found. 

Transaction volumes in 2022 were marginally below those seen the prior year, with 62 deals completed, down from 66 in 2021, at a total disclosed deal value of £3.06bn. 

After three consecutive quarters of decline, activity rose in the final quarter with 17 deals completed in Q4, however.

According to BDO, in the final quarter of the year, 60% of deals were cross-border, the highest number of cross border deals since 2016, demonstrating a high interest from international buyers despite recent hesitancy from some regions. 

In addition, a quarter of transactions in the year involved direct investment from private equity, with acquisitions by PE backed businesses leading to further consolidation in the market.

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

He added: “Our annual Logistics Confidence Index report, published in Q4 last year, indicated that almost half of logistics operators were likely to make an acquisition in the coming 12 months and the uptick in activity in Q4 does bear this out. 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.”

Prominent Q4 deals included DFDS’ acquisition of the Northern Ireland headquartered logistics group, McBurney Transport Group, for a consideration of £138m, subject to earn outs; the sale of Dorset-based company Astral Couriers to CitySprint; HSH Coldstores’ acquisition of competitor, ASC&T for £16.5m; and the acquisition of Savage Haulage, based in East Anglia, by The Ice Co.