M&A activity remains a prominent feature of the UK’s logistics and supply chain management sector, with new figures demonstrating that a large proportion of dealmaking is currently being driven by strategic consolidation.
According to a new M&A update from BDO, there were 21 deals completed in the UK logistics sector during the second quarter of the year, up from 18 during Q1.
While deal volume during the first half of the year fell to 39 deals compared to 46 in H2 2024, BDO reported that trade interest in M&A remains strong. So far this year, 94 per cent of deals in Q1 and 90 per cent in Q2 involved trade buyers.
The report also showed that the sector continues to attract strong interest from international investors. 45 per cent of transactions in Q2 were inbound, cross-border deals, with notable deals including Evri’s merger with German firm DHL’s e-commerce business, Dutch firm InPost’s £106 million takeover of Yodel Delivery Network Limited and the acquisition of ArrowXL by French company Jacky Perrenot.
40 per cent of deals, meanwhile, targeted software or tech-enabled businesses, highlighting the strong and growing importance of tech throughout the logistics and supply chain industry. Tech was also a key feature of the handful of private equity deals seen during Q2.
While BDO reported that PE investment “continues to be selective mirroring the trend in wider PE activity”, they added that “investors [continue] to be attracted to tech-enabled businesses”. Notable PE deals involving tech-enabled businesses include Palatine’s investment in fulfilment solutions cloud software provider fulfilmentcrowd Limited and Maven’s investment in cloud-based logistics software firm Epod Solutions Group (which trades as Podfather).
The solid dealmaking seen in logistics mirrors resilience across the sector more broadly, which comes despite the industry facing a wide range of challenges. According to BDO, key issues affecting logistics companies include rising costs and margin pressures, the availability of qualified and experienced drivers, cyber security, investment in automation and AI, infrastructure investment and investments in electric fleet and sustainable fuels.
BDO wrote that “there is a general sense that consolidation in the market will continue as scale drives efficiencies and the ability to deliver the required return on investment across fleet, and infrastructure.”
The report did note some difficulties, including that “uncertainty and lack of visibility over future earnings is holding back investment and moderating valuations” and that deal processes were taking longer as buyers seek greater certainty through due diligence.
“However,” BDO added, “where scale and market leadership combine with demonstrable plan for growth, then value can still be delivered.”
Jason Whitworth, M&A partner at BDO LLP,commented: "From an M&A perspective, consolidation in the market continues to influence strategic decision-making".
He added: "In what is a challenging market for many, logistics businesses continue to demonstrate strength and resilience in the face of rising costs and margin pressures, ongoing issues in accessing talent and strain being placed on global supply chains. As such, businesses are looking at ways to bolster their operations, whether that's through consolidation, investing in AI and automation, as well as addressing the sustainability agenda through the adoption of electric fleets and sustainable fuels."
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