Business deals hit record high, but economic outlook remains uncertain

Transaction volumes in Q4 2024 fell to 19 deals, compared to a quarterly five-year high of 27 seen in the previous quarter.

However, BDO said there remained a strong appetite for deals, particularly from international investors.

Its M&A Update report revealed that 93 deals were completed in the sector last year; in the final quarter the majority of transactions were trade deals and 58% were cross-border – an increase from 44% in Q3.

Examples included Green Fulfilment’s acquisition of Omni Channel Fulfilment; InPost SA’s acquisition of the remaining 70% shareholding in Menzies Distribution group and Schenk’s acquisition of Suttons Tankers.

Private equity appetite in the sector continued and there were several direct investments, whilst several of the trade acquisitions were by PE-backed businesses.

Jason Whitworth, M&A partner at BDO LLP, said: “The drop in deal activity in Q4 undoubtedly reflects a forward pull on deals to complete ahead of the Autumn Budget.

“The market was also digesting the budget announcements, notably the impact of the increased costs that will be incurred by businesses in the form of higher National Insurance Contributions and minimum wages.”

Whitworth said: “As we get into the full swing of 2025, the improving confidence highlighted in our UK Logistics Confidence survey in October 2024 appears to have been dented.

“Increased costs and the less benign economic outlook have increased the pressure on the industry.

“Alongside other significant operational changes, 2025 looks like it will be particularly challenging.”

BDO added that the inauguration of president Donald Trump had led to businesses being urged to prepare for potential supply chain disruptions and rising trade costs, as uncertainty looms over future US trade policies.

Its recent survey of 500 mid-market businesses revealed that supply chain disruptions are amongst the top challenges UK businesses face and it is expected that mitigating supply chain risks will become a key priority in the coming 12 months.