Key Trends Driving Supply Chain M&A in 2022

cargo ship carrying container for business import and export logistic supply chain,sea freight

2021 saw an elevated number of M&A transactions in the supply chain industry. Strategic buyers continued to look for value-creation opportunities as large firms fought for market share. The COVID-19 pandemic continued to highlight the importance of the global supply chain, as well as the companies that support it. Financial buyers have also taken notice as institutional capital flowed into all segments of the industry, partially driven by record low interest rates. Finally, the disruptions in the supply chain have caused retailers and manufacturers to look at insourcing essential segments of their transportation and logistics functions. These firms are acquiring supply chain operations to maintain control over their ability to consistently deliver their products to customers.

With this intense interest in the space, 2022 could be an optimal time to consider a merger and/or an acquisition in the supply chain industry.

Catalysts for Sellers :

  • Increased demand for quality companies from the lower mid-market up to large private firms will lead to competitive bids for businesses that explore a sale.
  • Valuations are rising across many sub-verticals due to the increased interest in the sector overall.
  • Central bank interest rates are likely to rise in the U.S. and Canada in 2022 to combat inflation, a broader economic downturn is not out of the question over the next 12-24 months; depending on your horizon this year could be the best time to exit.
  • Demographic shift of the tail end of the Baby Boom generation is provoking those near their retirement age to consider exiting to be unencumbered by running a business day-to-day.

Catalysts for Buyers :

  • Acquisitions are one of the surest paths to value-creation for both strategic and financial investors.
  • Even with potential interest rate hikes on the horizon, financing continues to be not only relatively cheap, but readily available as well.
  • In the face of limited warehousing space, a historic driver shortage, and a tight equipment market, buying another business will add scope, scale, and capacity to an existing operation in addition to the value created through cost and revenue synergies.

With lots of opportunities for all supply chain companies, there are success stories for all parties that take advantage of the prevailing tailwinds that we’ve been seeing over the past year.