UK logistics sector remains ‘lively’ for mergers and acquisitions, despite fall from record 2021 levels, says BDO

According to BDO’s UK & Ireland M&A Update – Q4 2022 report, in the final quarter of the year, 60 per cent of deals were cross-border, which is the highest number of cross border deals since 2016, demonstrating that the interest from international buyers remains high.

In a statement, BDO said: “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 (merger and acquisitions) 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 (the fourth quarter), 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.”

He continued: “While 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.”

Prominent fourth quarter deals in the North of England included Burnley-based EFS Global Ltd’s purchase of Eminence Transport Ltd and Floryn Ltd and DFDS’ acquisition of logistics group, McBurney Transport Group, for a consideration of £138m, subject to earn outs.

Other deals of note included the acquisition of Savage Haulage by The Ice Co, which is a provider of temperature controlled storage and distribution services.

In a statement BDO said: “The latter deal, one out of three in the quarter, highlights cold storage back on the deal radar, reflecting the recognised value in the critical nature of the country’s food supply chain infrastructure.”

Mr Whitworth 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.”