Logistics technology market merger and acquisition (M&A) and equity capital raising activity has picked up from 2023 and 2024, despite a continued freight recession and capital markets dislocation, according to data released by Capstone Partners.
Economic uncertainty and delays in anticipated Federal Reserve easing have continued to reinforce risk-averse investment attitudes, weighing on sector growth and equity financing activity. While M&A volume rose 14.8% year-over-year (YOY) in 2025, recent activity has been disproportionately propped up by distressed sales of early-stage companies that have struggled to raise additional growth capital. A sustained uptick in logistics technology transaction activity is overdue and is expected to accelerate in the long term. Increasing complexities around trade policy and supply chains, continued growth of e-commerce, advances in artificial intelligence (AI), and logistics services becoming ever more integral to end-customer experiences will likely continue to drive a growing need for logistics technology investment.
“Green-shoots have started to appear for logistics technology investors in 2025. However, the increase in activity is not broad-based. Promising up-starts pursuing Seed or A rounds have been successful, but players who raised capital in 2020-2021 have difficulty raising follow-up rounds. This dynamic is playing into the increase in M&A activity for otherwise cash-strapped businesses,” says Gordon Mackay, managing director, Capstone Partners.
Key takeaways:
· By the end of 2024, sector participants were optimistic that improving logistics and freight industry conditions would drive accelerated logistics technology adoption. Unfortunately, hopes for a freight recovery have been pushed out further, weighing on sector profitability and slowing the adoption of much needed technologies.
· In May, 91% of logistics managers indicated that they expect supplier and material costs to rise and are gearing up to make significant changes to their supply chain strategies to address shifting U.S. trade policy and manage these rising costs, according to a 2025 PwC survey.
· Further, 85% of logistics managers have already or plan on increasing their technology budgets to meet these rising challenges. Logistics technology adoption is expected to pick up as freight recession headwinds ease and revenue pressures subside. Low digital penetration has acted as a long-term tailwind to sector growth and M&A activity, with buyers and investors pursuing profitable, scalable targets that address key supply chain pain points and help manage rising complexities.
· To date, both sponsor-backed and new platform deal volumes have paced the prior year period after deal activity accelerated in the second half of 2024. Similarly, strategic M&A activity has continued to accelerate YTD, with deal volumes up 66.7% and 25% YOY for public and private buyers, respectively. These gains have come on the heels of easing market conditions in late 2024 that encouraged strategic buyers to resume inorganic growth initiatives after a year of prioritizing internal cost control efforts. These late year market improvements were particularly beneficial to public buyers, with 2H 2024 deal volume rising by 14 deals YOY and by 10 transactions compared to 1H 2024.
· The rise in sector M&A activity to date can be partially attributed to financially distressed companies seeking new ownership, as additional rounds of growth capital have been increasingly difficult to raise. Sector headwinds from persistent macroeconomic volatility, geopolitical uncertainty, and the freight recession have continued to erode equity financing interest across the sector, leaving some logistics technology startups struggling to stay afloat as new funding opportunities have declined. This environment has been particularly beneficial for strategic buyers looking to cheaply expand technology capabilities and product offerings through bolt on acquisitions, with strategic deal volume rising 36.4% YOY in YTD 2025.
· Strategic buyers will likely remain well-positioned in the near term to bolster existing operations and product offerings by continuing to pursue acquisitions of distressed targets.
· Tailwinds from increasingly complex supply chain operations and digital transformation demands have continued to bolster long-term outlook across the logistics technology market.
· For three consecutive years, equity financing deal volume has declined amid demand weakness and prolonged freight recession pressure. To date in 2025, equity financing deal volume has fallen 29.7% to 265 transactions compared to 377 in YTD 2024. Consecutive years of declining equity financing investments have constrained sector startup’s growth ambitions, evidenced by the drop off in sector initial public offering (IPO) activity. From 2022 through YTD 2025, equity-backed IPO activity across the logistics technology market has declined 44.4% at 10 listings compared to 18 in 2021 alone.
· Despite the pullback, investors have continued to selectively deploy capital to logistics technology players and solutions with established profitability, scalability potential, and the ability to address key supply chain pain points. Fueled by attractive long-term tailwinds, including e-commerce growth, low digital penetration, and increasingly complex supply chain operations, equity capital invested rebounded 35.5% YOY in 2024 and has since kept climbing—with YTD 2025 capital invested up 84.4% YOY at $4.5 billion.
· Solutions that support cross-border operations, enhance visibility, and ease logistics management or are outfitted with next-generation technology—like AI—have been a key focus for investors to date, particularly amid recent global trade policy volatility.
· Looking ahead, ongoing economic uncertainty while the Federal Reserve prioritizes combating inflation over restoring growth in the economy will likely remain an overhang to growth capital formation in the near-term.
