Logistics alert: the return of midmarket M&A

2018 looks set to be a busy year for mergers and acquisitions (M&A) in the mid-market logistics sector.
 
Moore Stephens’ research shows that, globally, the volume of deals in the logistics sector increased by 18% in 2017, while the total value of deals rose by 5%. Similarly, in the UK and Europe, the volume of deals increased by 16% and total deal value by 8%.
 
Further analysis reveals that the big difference in 2017 was the return of the mid-market deal – transactions valued at £50m or less. While 2015 and 2016 were characterised by a number of ‘megadeals’ around the world and in the UK, 2017 saw a re-emergence of M&A transactions in the mid-market arena – and our analysis shows that the average deal size in the UK was around £20m in 2017.
 
It seems likely that we’ll continue to see relatively high levels of M&A activity during 2018. Our latest barometer of sentiment in the UK logistics sector, The UK Logistics Confidence Index 2017, found high expectations for M&A deals this year: 40% of participants said they were likely to make acquisitions over the next 12 months – the highest percentage in the five years history of the report.
 
So why are we seeing this uptick in midmarket M&A activity in the logistics sector? The first driver is the growth in certain subsectors, such as e-fulfilment and courier ‘final mile’ delivery. Logistics companies want to get a solid stake in these vibrant segments of the market. A second important factor is the desire for diversification, so that businesses have more services to offer to their customers. A third stimulant is the drive for cost savings and synergies as logistics businesses respond to the competitive environment in which they are operating.
 
So get ready for an interesting year. The mid-market logistics sector is on course for further consolidation.
 

Leave a comment

 Security code