What’s happening with mergers and acquisitions in the supply chain?

The state of mergers and acquisitions (M&A) in the supply chain industry is heavily influenced by various factors like nearshoring, disruptions, and digitization. Henri Capin-Gally, a partner at White & Case law firm, sheds light on these dynamics.

One key trend driving M&A activity is the interest in nearshoring manufacturing operations from China to Mexico. This shift has ignited interest in M&A deals within the supply chain sector. The allure stems from the robust integrated logistics network between Mexico and the U.S., facilitated by rail lines, ports, and highways. Despite concerns over potential tariffs on Mexican imports, buyers are capitalizing on lower multiples now with the expectation of increased returns in the future.

In the past five years, disruptions in the supply chain industry have somewhat dampened M&A activity in transportation and logistics. Although deals have been delayed, they have not been entirely scrapped. Capin-Gally notes that despite these challenges, most clients perceive the current environment as an opportune time for strategic acquisitions.

Furthermore, advancements in technology are acting as a catalyst for M&A within the supply chain. Companies seeking to enhance efficiency and competitiveness are targeting acquisition targets equipped with state-of-the-art information and material handling systems. The push to integrate such technology into operations is driving acquisitions in the sector.

Regionally, much of the M&A focus in the supply chain space is on Mexico due to the attractive transportation and manufacturing infrastructure it offers. Investments are primarily directed towards asset-based transportation and logistics providers, highlighting the importance of regional considerations within M&A strategies.

Despite economic uncertainties stemming from tariffs and trade tensions, Capin-Gally remains optimistic about the future of M&A activity in the supply chain industry. He believes that despite external challenges, the sector is poised for growth in the coming years.

Overall, the evolving landscape of nearshoring, disruptive forces, and technological advancements is shaping the M&A trends in the supply chain industry. While challenges exist, many players see this as a time of opportunity and strategic growth within the sector. As companies navigate these complexities, strategic acquisitions and partnerships are likely to continue driving the evolution of the supply chain industry in the foreseeable future.