UK transaction volumes in the logistics & supply chain management industry remain strong with 32 deals completed in H1, according to the latest report from accountancy and business advisory firm BDO LLP.
The report also reveals a slight decline in deal volume in Q2 2019, but this followed an exceptionally active Q1, which was the most active quarter throughout the four-year period reviewed. Interestingly, H1 deal activity was dominated by UK investors.
Deal activity in the sector looks set to continue over the next 12 months, with a third of businesses surveyed in the BDO & Barclays Logistics Confidence Index 2019 indicating that they are likely to make an acquisition in the year ahead.
This recent BDO H1 deals update found freight logistics was the most active sub-sector for deal volumes in 2019 H1, with a 25% share of the deals, closely followed by freight forwarding, transport planning, and postal and courier delivery services, with 16% of deals.
The period appears to show deals of lower average value, with aggregate deal value reaching £241m in the UK in the first half of 2019, but with the period being defined by limited deal value disclosure; BDO advised on £187m worth of industry deals over the period.
These latest figures follow a rise in UK annual deal volumes of 48% in 2018, but with only a 1% increase in aggregate deal value, indicating a shift towards high volumes of mid-market deals.
Jason Whitworth, M&A partner and logistics & supply chain management lead at BDO, explained: “Despite the challenging and uncertain economic environment, 2019 deal volume in the logistics sector has been very strong so far. There was a slight decline in volume in Q2 2019, but this followed an exceptionally active Q1, which proved to be the most active quarter throughout the review period.
“Looking forward, the question is, can this strong deal activity continue? The answer to this could be yes. Consolidation in the pursuit of economies of scale to drive operational efficiencies continues to be a primary motive, but the market is also buoyed by the continuing interest and availability of funds from private equity.”