Logistics Automation and Logistics Compliance Software Capital Markets Activity

Between Q1 2020 and Q3 2024, the logistics automation and compliance software sector received over $72 billion in capital across 1,544 deals. The sector plays a vital role in optimizing supply chains by streamlining logistics, reducing costs, and improving efficiency, while also ensuring compliance with complex regulations governing trade, environmental standards, and product safety.

These technologies also support ESG compliance management, including frameworks like TCFD and CDP, which help companies manage climate-related risks and improve sustainability reporting. The ability of these technologies to help companies avoid significant fines related to non-compliance with complex regulations further increases their value. Consequently, investments in this space offer both market growth potential and long-term strategic advantages.

As interest grows in solutions for different logistics transportation modes, such as trucks and railroad, companies aim to optimize multimodal logistics operations. Logistics automation technology includes tools for automating warehouse operations, managing inventory, improving shipping processes, and ensuring compliance with regulatory standards. This often involves managing Bills of Lading (BOLs) and other key documents, ensuring accurate tracking and regulatory compliance across transportation networks.

These technologies assist businesses in navigating complex logistics environments, ensuring faster delivery times and minimizing errors. Compliance software with safety and workflow management tools plays a crucial role in helping companies meet various regulatory requirements, including import/export regulations, safety standards for hazardous materials, and environmental regulations aimed at reducing the carbon footprint of logistics activities. As regulatory scrutiny intensifies across industries like oil and gas, pharmaceuticals, and food and beverage, the demand for compliance solutions continues to grow.

• Between Q1 2020 and Q3 2024, approximately $72 billion was invested in logistics automation and compliance software companies across 1,544 deals. The average deal size was approximately $47 million, reflecting significant capital deployment per transaction in this sector.
• Notable peaks in both deal activity and capital investment occurred, especially in Q1 2022 and Q4 2024. Q1 2022 saw the largest capital deployment of $8.88 billion across 111 deals, marking a period of heightened investment interest.
• A sharp decline was observed in Q4 2022, with only $395 million invested across 77 deals, followed by a significant rebound in Q1 2023, when capital investments surged to $4 billion. This fluctuation can be attributed to heightened economic uncertainty in the latter half of 2022, marked by rising interest rates, high inflation, and growing concerns about a potential recession. Central banks in major economies, such as the US and Europe, aggressively raised interest rates to combat inflation, which increased borrowing costs and created a more cautious investment environment, leading to the slowdown in Q4.
• The market rebound in Q1 2023 likely reflects renewed investor confidence as economic conditions began to stabilize, with inflationary pressures easing and central banks signaling a potential slowdown in the pace of interest rate hikes. Additionally, the lower valuations following the Q4 decline may have presented attractive entry points for investors looking to capitalize on the logistics automation and compliance software sector’s long-term growth potential. This combination of factors helped restore investment activity, resulting in a sharp increase in capital deployment at the start of 2023.
• Despite fluctuations in capital invested, the deal count remained relatively stable, highlighting consistent deal-making activity across the period. However, the size of individual investments varied widely depending on specific market dynamics and major transactions during each quarter.

• Between Q1 2020 and Q3 2024, the United States led in capital investments for logistics automation and compliance software, contributing 59% of the total capital invested in the sector. This indicates the country’s strong position in driving innovation and growth in this industry.
• China accounted for 12% of the total deal count during the same period, making it a key player in terms of transaction volume, though its capital investment only reached 15% of the total. This suggests China is involved in numerous smaller-scale deals compared to the larger investments led by the United States.
• While the US and China lead in deal count, countries like the United Kingdom (5%), Germany (4%), and Canada (4%) have also been active in this market. In the United Kingdom, investments often target digital platforms for customs compliance and supply chain management, driven by the need to adapt to post-Brexit regulatory changes. Germany’s deal activity reflects its emphasis on industrial automation, with a focus on optimizing logistics in manufacturing environments to maintain its global competitiveness in exports. Canada’s participation in the market highlights its efforts to improve cross-border trade logistics, especially given its close economic ties with the United States.
• Countries such as Brazil and South Africa, while accounting for a smaller percentage of the total capital invested (around 3% each), are nonetheless contributing to the growing global landscape for logistics automation and compliance software, indicating future potential for growth in these regions.

• A large portion of capital invested ($12 billion) and deal count (306 deals) in logistics automation and compliance software was driven by mergers and acquisitions. This highlights M&As as a preferred strategy for consolidation and expansion within the sector, playing a crucial role in growth and market positioning.
• Buyout and LBO transactions also played a significant role, raising $9.66 billion across 157 deals. This reflects the sustained interest in leveraging acquisitions of mature companies to drive long-term value creation in the logistics and compliance space.
• PIPE transactions contributed $7 billion through 29 deals, showing strong capital flow into public companies looking for private investments to fuel their growth. This shows the importance of private investments in supporting publicly traded firms’ expansion plans.
• Later stage VC deals attracted significant investment, with $3 billion raised through 158 deals. This demonstrates continued investor confidence in more developed companies that have already established a foothold in the market and are seeking additional funding for scaling.

Deal Spotlight:

MERCURYGATE

MercuryGate, headquartered in Cary, North Carolina, is a leading provider of transportation management system (TMS) software, catering to a range of industries, including logistics, retail, and manufacturing. The company specializes in optimizing freight operations, managing multi-modal transportation networks, and providing end-to-end visibility throughout the supply chain. Its solutions leverage advanced algorithms and data analytics to streamline logistics processes, reduce transportation costs, and enhance delivery performance.

The company was acquired in a buyout transaction by Körber Supply Chain, a global leader in supply chain software and automation, for approximately $395 million on October 31, 2024.

The logistics automation and compliance software sector remains a vital area for investment, with the United States dominating capital deployment. Mergers and acquisitions, representing the majority of deals, reflect the sector’s consolidation trend and its focus on achieving market dominance. As regulatory complexities increase and the demand for supply chain efficiency rises, this sector’s long-term growth prospects continue to attract significant investor interest.

Sources: Insider Monkey, S&P Global, Korber, Grand View Research.

Enterprise Telecom Communication Services and Solutions M&A Transactions and Valuations

Between Q1 2020 and Q2 2024, acquirers deployed $56 billion in enterprise telecom communication services and solutions. The sector encompasses all levels of enterprise Wi- Fi connectivity, telephony, communications IT infrastructure, and related communication services for businesses.

Most transactions conducted and capital invested in the enterprise telecom communications services and solutions sector were by European-based acquirers. European acquirers contributed $26 billion across 201 transactions, highlighting their appetite for larger transactions. North American acquirers also contributed significantly with 35% of all capital invested in the sector across 119 transactions.

Strategic mergers and acquisitions contributed to the majority of transactions and capital invested in the sector with an average deal size of under $90 million. This highlights the appetite for middle-market strategic acquisitions and add-ons. Buyout and leveraged buyout transactions accounted for approximately one-third of all deals, with an average size of over $160 million.

Enterprise telecom communication services and solutions founders and shareholders should be aware of exit opportunities presented by strategic acquirers from Europe and North America.

• The valuation multiples are based on a sample set of publically listed podcasting and podcast advertising companies and M&A transactions in the sector. The data was collected on August 29, 2024.
• The sample set trades at an enterprise value to EBITDA multiple range of between 5x and 21x with an increase in average multiples as the enterprise value increases.
• Average enterprise value to revenue multiples ranged from 1x and 5x.      

• The median transaction size ranged widely with peaks of over $200 million seen in Q4 2020, Q2 2020, and Q2 2024. This was driven by large transactions conducted by strategic acquirers. 
• The median deal size was under $50 million for 9 of the 16 quarters between the start of 2020 and the end of 2023. This could indicate an abundance of activity in the lower middle markets and an appetite for smaller transactions.   
• Since Q4 2023, the median transaction size has increased significantly, which could signal the rebound of large acquisitions in the sector and an increase in capital available for acquisitions. 

• Between Q1 2020 and Q2 2024, $56 billion was deployed across 424 enterprise telecom communication services and solutions acquisitions. The average transaction value was $132 million, highlighting the volume of transactions in middle and upper-middle markets.  
• The most significant deployment of capital, $15 billion, occurred in Q2 of 2021. Several large strategic acquisitions in Europe drove the large capital outlay in both Q2 of 2021 and Q3 of 2020.   
• While the deal count shows variability, it remains above 16 per quarter. This consistency indicates a stable interest in deal-making, even as the investment amounts fluctuate. The exception was Q2 of 2020 when only 11 transactions were conducted. This was likely driven by market uncertainty caused by the pandemic and economic lockdowns. The largest deal count in the enterprise telecom communication services and solutions occurred in Q1 of 2022 with 34 M&A transactions.

• Transactions by strategic acquirers in M&A transactions dominated the sector. They contributed $31 billion of capital invested in the sectors while conducting 288 transactions. The average transaction size of $90 million highlights the appetite for middle-market acquisitions. 
• Buyouts and leveraged buyouts accounted for $19 billion of capital invested across 119 M&A transactions in the enterprise telecom communication services and solutions industry. The average transaction size of $160 million indicates the appetite for private equity acquisitions in the uppermiddle market. 
• Add-ons and other transactions accounted for less than 10% of capital deployed respectively.

• European-based acquirers dominated the capital invested in the enterprise telecom communication services and solutions sector, with over $26 billion across 201 transactions. This could be due to a variety of factors, including the demand for upgrading legacy infrastructure, larger margins in Europe, or the abundance of smaller firms leading to role-up opportunities.  
• Acquirers based in Italy, the United Kingdom, and Germany were the most active in the sector by deploying 13%, 11%, and 5% of total capital respectively.
• North American acquirers, particularly in the US and Canada, conducted roughly one-third of capital invested ($20 billion) and deal count (133) in the sector. The dominance of large telecommunication companies in the sector may affect the competitiveness of the enterprise solutions sector leading to fewer acquisition targets.
• The rest of the world exhibits a noticeable spike in the deal count, but an exceedingly small share of the capital deployed. This implies a wide distribution of smaller deals across various countries not individually listed. These smaller markets collectively engage in a considerable number of enterprise telecom communication services and solutions transactions, but each deal tends to be small, reflecting diverse capital market activities.

Deal Spotlight:

DALY SYSTEMS

Daly Systems is a UK-based provider of telecommunications solutions for businesses. The company offers connectivity, telephony solutions, cloud solutions, infrastructure, IT services, and other related services, providing clients with customized enterprise solutions.

The company was acquired by Onecom for an undisclosed amount through their financial sponsors LDC and Ares Management.
For more information on how transaction structures impact seller liquidity, see Jahani and Associates’ article here.

 

Enterprise telecom communication services and solutions include enterprise Wi-Fi connectivity, telephony, communications IT infrastructure, and related communication services. The sector is dominated by large acquisitions by European strategic acquirers and smaller transactions conducted by North American acquirers. 

Enterprise Telecom Communication Services and Solutions companies should be mindful of exit opportunities. EBITDA multiple in the sector ranged between 5x and 21x in the period with technology and intellectual property contributing significant increases in multiples. 

Sources: Pitchbook Data, Jahani and Associates (1), (2).

Manufacturing Execution Systems (MES) Capital Market Transactions

Between Q1 2020 and Q2 2024, $6.5 billion was deployed in the manufacturing execution systems sector (MES). MES software solutions are designed to manage, monitor, and execute manufacturing operations in real time. They track the entire production process, from raw materials to finished goods, ensuring efficiency, quality control, and regulatory compliance. By optimizing workflows and minimizing downtime, MES helps manufacturers improve product quality, reduce waste, and enhance overall productivity.

Most transactions conducted and capital invested were by US-based investors, with 88% of all capital invested. This shows an appetite to invest in advanced manufacturing technology as demand for onshoring and nearshoring production increases. Chinese investors conducted the second-highest transaction volume in the MES industry. The low average transaction size of under $7 million indicated the early stage nature of the sector in China and the demand for manufacturing innovation.

MES founders and shareholders should be aware of fundraising opportunities presented by US-based investors and possible exit opportunities.

• Between Q1 2020 and Q2 2024, $6.5 billion was deployed across 232 transactions in the MES sectors. The average transaction value was $28 million, highlighting the volume of transactions conducted in the middle and lower-middle markets.
• The most significant deployment of capital, $2.7 billion, occurred in Q4 of 2024 across 13 transactions with large private equitytransactions driving investment.
• The largest deal count occurred in Q2 2022 with 34 transactions. This may have been driven by the demand for manufacturing execution systems at the start of COVID-19 and the related lockdowns. The deal count in the remaining periods fluctuated between 8 and 20 transactions per quarter, indicating strong demand for investment in the sector.
• Two of the largest transactions conducted in the sector were completed by Aptean.com. Aptean raised $4.7 billion across two debt transactions closed on December 18, 2023, and January 29, 2024.

• Venture capital transactions saw a high level of transactions, accounting for 28% of deals in the sector. In the sector 65 venture capital transactions occurred, in which $195 million was deployed.
• Transactions by strategic acquirers were dominated by capital invested. Across 60 transactions, $2.5 billion was deployed. The average transaction size of $40 million indicates an appetite for transactions in the middle and lower-middle markets. 
• Private equity transactions accounted for 30% of capital deployed in the sector and 27% of the deal count. This shows the abundance of growth-stage companies in the manufacturing execution systems sector.
• PIPE, IPO, and other transactions accounted for a smaller portion of the capital raised, and the deal count indicated less mature companies in the sector.

• US-based investors dominated the capital invested in the manufacturing execution systems sector, with over 88% of capital deployed ($5.7 billion). US-based investors conducted a significant portion, 33% of transactions, with 77 complete and announced deals. This could be due to a variety of factors, including the demand for onshore or nearshore manufacturing facilities against the backdrop of rising geopolitical tensions and supply chain concerns. Similarly, the demand could be driven by the need to optimize and automate manufacturing processes in the US to remain cost-competitive with Asian markets.
• Chinese investors contributed $441 million across 65 transactions with an average deal size of under $7 million. This implies an abundance of smaller transactions indicating the early stage nature of the sector and the demand for manufacturing innovation.
• Investors in developed nations such as Canada, Germany, and Ireland contributed significantly to the deal count but deployed relatively less capital with no country investing more than $200 million. This shows the early stage nature of the sector outside of the US and the abundance of smaller transactions. 
• The rest of the world exhibits a noticeable spike in the deal count, but an exceedingly small share of the capital invested. This implies a wide distribution of smaller deals across various countries not individually listed. These smaller markets collectively engage in a considerable number of MES transactions, but each deal tends to be small, reflecting diverse capital market activities.

Deal Spotlight:

APPRENTICE

Apprentice is a Jersey City-based developer of a manufacturing execution system designed to serve the pharmaceutical industry. The company’s system integrates augmented reality, voice recognition, and artificial intelligence into wearable, mobile, and desktop devices. The lab execution system enables pharma to integrate the data and process to reduce human error and inefficiency in the drug production process.

The company raised $65 million of venture funding through a combination of debt and equity on March 9, 2023. Approximately $63 million of Series C1 was raised through equity sales at a pre-money valuation of $527 million. The round was led by ICONIQ Growth with participation from Insight Partners and Alkeon Capital Management. Approximately $2 million of the debt was provided by undisclosed lenders.

Capital invested in the MES sector is dominated by US-based investors. The demand for onshoring and nearshoring manufacturing is driven by supply chain concerns and rising geopolitical tension. Developed markets have similarly invested in the sector to remain competitive with Asian markets. Chinese investors have focused on early stage transactions, the nascent nature of the sector in China, and the demand for manufacturing innovation.

There is a relatively even distribution of deal count venture capital transactions, private equity transactions, and mergers and acquisitions. This showcases significant capital market opportunities available to MES companies at all stages of growth.

Provider-Driven Clinical Health Test Diagnostics and Analytics Capital Markets Activity

Between Q1 2020 and Q2 2024, over $240 billion was deployed globally, across 10,340 capital market transactions, in the clinical health test diagnostics sector with an average deal size of $24 million.

The clinical health test diagnostics and data analytics sector involves the assessment of an individual’s overall health through comprehensive biomarker and physiological data analysis. This sector integrates advanced testing methods and tools with sophisticated data analytics to provide personalized health insights. It emphasizes preventive care and personalized medicine, enabling healthcare providers and practitioners to optimize patient outcomes by addressing the root causes of health issues, often preemptively, through preventative screening.

Investing in the clinical health testing and diagnostics sector is attractive due to the increasing focus on preventative and personalized healthcare. Rising consumer awareness, technological advancements, and the expansion of personalized medicine are driving demand for omprehensive health insights. With strong market growth and global expansion opportunities, the sector offers diverse and scalable investment prospects,
making it a compelling choice for investors seeking to capitalize on the evolving healthcare landscape.

• Between Q1 2020 and Q2 2024, over $240 billion was deployed across 10,340 capital market transactions in the clinical health testing and diagnostics sector by global firms with an average deal size of $24 million.
• Q2 2021 reflects the period with the most significant deployment of capital, $24 billion, while Q2 2020 experienced the highest deal count, 847.
• Capital market activity in this space heightened during the Covid-19 pandemic due to the accelerated demand for and adoption of digital health technologies for testing and diagnostics.
• There is a consistent global demand for transactions in the clinical health testing and diagnostics sector with an average deal count per quarter of 574.
• The largest completed transaction was the 100% acquisition of San Diego, Californiabased Prometheus Biosciences by Merck & Co. for $10.8 billion on April 15, 2023.

• The United States is the leading destination for capital deployment in the clinical health testing and diagnostics industry, attracting 50% of the total global deal count (5,295 deals) and 71% ($177 billion) of the capital invested. This underscores the US as the primary market for both deal activity and significant capital inflows, reflecting its strong ecosystem and innovation in this sector.
• France and Germany have attracted substantial capital investments of $15 billion (224 deals) and $14 billion (262 deals), respectively. This indicates that these markets are receiving significant funding, likely directed towards larger, more established companies or advanced-stage projects, highlighting their importance in the European health tech landscape. 
• The United Kingdom has a high deal count of 817, reflecting a vibrant and active market. However, the capital invested totals $6 billion, suggesting that while there are numerous deals, they are generally of a smaller size compared to those in France, Germany, or the United States. This indicates a focus on early stage or smaller-scale ventures within the UK market.
• The “Other” category, accounting for 30% of the deal count and 11% of capital invested, suggests a broad distribution of investments across smaller countries or emerging markets. This indicates a high amount of global interest and the potential for significant developments in functional health testing and data analytics outside of the major markets.

• Merger and acquisition (M&A) deals lead the sector in terms of capital invested, with $69.7 billion invested across 538 deals. This indicates a strong trend of consolidation within the clinical health testing and diagnostics industry, where larger companies are acquiring smaller ones to gain a competitive edge or to expand their service offerings.
• Later-stage VC deals are the most frequent, with 1,753 deals accounting for $40.9 billion in capital invested. This high volume of VC activity suggests that the industry is attracting significant interest from investors looking to fund companies in their growth phases, aiming to capitalize on the sector’s potential.
• Buyout/LBO deals account for $33.81 billion across 234 deals, highlighting a strong interest in mature companies that are ready for strategic shifts or expansions. This, along with the significant amount of capital flowing into growth/expansion deals ($5.14 billion), underscores the attractiveness of established companies within this space for investors looking to capitalize on proven business models. 
• The presence of a wide range of deal types suggests a diversified investment approach within the industry. Each type of deal has attracted billions of dollars, indicating that companies in the functional health testing and data analytics sector have multiple avenues for raising capital.

Deal Spotlight:

CHEMBIO DIAGNOSTICS

Chembio Diagnostics, a Hauppauge, New York-based developer and manufacturer of rapid diagnostic tests, was acquired by Biosynex, a French market leader in the design and distribution of rapid tests, at a 27% share premium.

This acquisition unites two leading point-of-care diagnostics companies, each specializing in the development, manufacturing, and marketing of rapid tests for both practitioner and home use.

The acquisition broadens Biosynex’s global footprint while enhancing its European presence. The acquisition is expected to accelerate product innovation, leveraging the combined expertise of both companies.

Additionally, the consolidation of operations is anticipated to yield cost savings, synergies, and value creation by increasing manufacturing scale and reducing overhead costs, ultimately improving gross and operating margins.

The clinical health testing and diagnostics sector has experienced significant capital market activity, with over $240 billion deployed globally across more than 10,000 transactions between Q1 2020 and Q2 2024. The US leads the sector, attracting the majority of capital, while Europe and other regions also show strong investment interest. The wide range of deal types, from mature to early stage companies, underscores the sector’s diverse growth opportunities.

As demand for personalized and preventative healthcare continues to rise, this sector remains a highly attractive and scalable investment opportunity for those looking to capitalize on healthcare innovation and technological advancements.