Capstone Headwaters reports: Pandemic accelerates focus on logistics technology

Capstone Headwaters released its Logistics Technology M&A Industry update today, reporting that Capstone expects merger and acquisition (M&A) and venture capital (VC) activity to increase in 2021 as executives place a greater importance on integrating technology into their supply chain. Through Q3, M&A volume has reached 60 deals and has surpassed the volume over the first three quarters of 2019 (52 deals), 2018 (44), and 2017 (56). The three sectors that saw a noticeable increase in deal volume were Warehousing, Logistics-Specific Back Office, and E-Commerce Software. Additionally, M&A activity and valuations in the Telematics space have remained strong.

“The Telematics sector is highly fragmented, and Capstone expects increased consolidation over the next few years,” said Managing Director, Burke Smith, Head of Transportation & Logistics. “Even though the sector is more mature than others in the Logistics Technology industry, valuations for deals have remained strong over the past three years averaging 3.5x revenue for deals over $15 million in value.”

The demand for technology throughout logistics will only continue to grow with shippers looking for visibility into their freight and tools to help optimize supply chains. Over the next few years, Capstone Headwaters expects each segment of the industry to be a focus of investment and merger and acquisition; from inside the four walls to outside, rail to air, hardware to software, and beyond.