Q4 2023 – Quarterly Recap & 2024 Outlook
- In Q4 2023, US and Global Transportation and Logistics (“T&L”) M&A activity experienced a 40.0% and 49.5% decline respectively, relative to Q4 2022. Currently, the high cost of capital favors strategic buyers compared to financial buyers.
- Overall, in 2023, the US middle market experienced a notable decline in M&A activity, reaching its lowest transaction volume since 2016, fueled by the absence of financial buyer exits. This led to a 29.5% year-over-year decrease in deployed PE capital in the US. Despite these challenges, strategic buyers emerged as enthusiastic market participants, actively pursuing opportunities to acquire middle-market companies.
- Amid economic uncertainties, strategic buyers showcased resilience and an appetite for growth through M&A. Strategic buyers refined their acquisition strategies, emphasizing a focused investment approach tailored to their core competencies to maximize synergies. They also pivoted towards niche market positions and placed increased emphasis on technology-driven targets. Strategic buyers prioritized acquisitions conducive to collaborative post-acquisition integration efforts, aiming to enhance operational efficiency and accelerate growth.
- Despite the slowdown in deployment of capital, fundraising activity has been a remarkable success story, reaching record highs over the past two years. This disparity between slower deployment and robust fundraising has led to a significant increase in dry powder, reaching a new high of $955.7 billion. This abundance of capital, representing a 9.3% increase in the past two years, has instilled optimism in the market for a potential rebound in 2024 deal volume.
Read Transportation & Logistics M&A Pulse Q4 2023 Full Report
