Jason-Whitworth

Jason Whitworth M&A partner, BDO

When it comes to merger and acquisition activity in the logistics industry, 2019 was always going to herald tough conditions.

However, while transport and logistics companies are right to remain cautious, it isn’t all doom and gloom. Our latest ‘Logistics and Supply chain management quarterly review’ paints a more positive outlook for the sector, with emerging opportunities equal to the challenges.

There are clearly benefits to be had in consolidation around logistics, plus interest in new technology platforms underpinning automation and efficiencies in supply chains.

Recent M&A figures have certainly remained strong and illustrate the fact that companies continue to target growth, remaining acquisitive despite the challenging climate.

Looking back at the end of 2018 we saw a four-year high for deal volume in the final quarter, demonstrating a continued confidence in the logistics market. Similarly, Q3 2018 saw the highest combined deal value in four years, hitting £371m. Last year also saw an interesting shift in terms of investment. Brexit and associated economic concerns gave rise to an expected fall in interest from global markets, however, M&A activity didn’t decline, but was instead bolstered by domestic activity, with the lion’s share of acquisitive companies based in the UK.

Last year, 50% of buyers were UK-based businesses versus just 23% in 2016. European buyers accounted for just 23% of total deal activity in 2018, compared with 40% in 2016. It’s a largely unavoidable shift given the changing dynamics, but it’s encouraging to see that demand remained robust, with UK-based logistics companies continuing to push ahead with growth strategies.

Brexit will undoubtedly bring unprecedented challenges during the next 12 months, and the UK logistics and supply chain industry is at the head of the charge. As well as in developing trade links in Europe and beyond, growth is achieved by supporting retailers as e-commerce continues to outpace the high street, and in harnessing new technology to deliver greater operational efficiencies.

 

 

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