M&A Activity Remains Strong As Momentum Continues Since The COVID-19 Shutdown
Capstone Partners released its July 2022 Freight Brokerage Market Update, reporting that merger and acquisition (M&A) activity in the Freight Brokerage market remains overwhelmingly positive. Opportunities for consolidation, recent private equity-backed companies, and available capital continue to drive transactions and competition in the market, providing business owners attractive exit opportunities.
Transaction activity in early 2022 has seen a particular demand for hybrid broker models, creating national leaders from the integration of infrastructure in the broker-distribution landscape. Brokers with an asset-based arm, proprietary technology, and unique offshore strategies have seen heightened demand.
Riding the momentum of white-hot activity since the COVID-19 shutdown, brokers are maintaining their record profitability growth. Signals in Q2 2022 potentially indicate activity normalizing as tender rejection rates have shifted and spot rates have fallen from their record highs. However, in contrast to the rumblings of recession, consumer demand presents a strong case for a positive outlook on the future for third party logistics (3PLs). Even as supply chain challenges ease, brokers have been highlighted as key players in the future of logistics.
While transportation recession headlines are not proving out, they are impacting deals. Some logistics publications have forecasted a “bloodbath” in Trucking and Freight Brokerage but have already started to modify their language, pulling away from this extreme view. As with everything, the Freight Brokerage market has cycles, and buyers with logistics experience understand this. Generalist private equity firms however have taken note and shied away from the space.
Also included in this report:
- Discussion of macroeconomic trends that have been most powerful in driving M&A activity.
- Why mixed-asset models are garnering interest in the market, including two case studies.
- How deal structures are factoring in fears of a market shift.
- An exclusive interview with Richard Piontek, CEO of Direct Connect Logistix, on the company’s recent acquisition activity and his outlook on the Freight Brokerage sector.
For more information on this deal or the investment banking services offered to Transportation and Logistics companies contact us.
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