Capstone Headwaters Reports: New Factors Impact Valuation in Storage, Supply Chain, and Fulfillment

Capstone Headwaters released its Warehousing & Fulfillment Market Update today, reporting that the historically underappreciated segment of third-party storage facilities has not only been reconciled, but prioritized as the rise in e-commerce shifts operational functions such as product storing, sorting, and packaging to outsourced warehouse locations.  As a result of COVID-19’s acceleration of e-commerce sales, merger and acquisition (M&A) activity within the Fulfillment sector increased, bringing heightened valuations for middle market companies providing necessary infrastructure (6-15x EBITDA depending on company size and capabilities).

Capstone spoke with dozens of supply chain companies on their acquisition plans for 2021, and identified four main characteristics for the makeup of attractive acquisition targets: 1) technology integration capabilities, 2) value-added services, 3) large footprints and scalability opportunism, 4) transactional value through transportation revenue.

“I see 2021 as being a very good M&A market for logistics in general and specifically warehousing and fulfillment. There is a larger emphasis on having agile supply chains and 3PLs will fair well because of that,” TJ Lynch, NFI’s Senior Vice Present of Finance and Marketing told Capstone.  “Our M&A strategy mainly focuses on founder-owned or family-owned business.  This will be a focus area of NFI and we love warehousing and fulfillment and will continue to look for good deals out there that will add some size, scale, and industry specializations to our portfolio.”

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