Henri Capin-Gally, partner in the law firm of White & Case, discusses how nearshoring, disruption and digitization are impacting supply chain mergers and acquisitions.

Continuing interest in nearshoring of manufacturing from China to Mexico is helping to drive interest in M&A deals among supply chain providers, Capin-Gally says. Dealmakers are attracted by the integrated logistics infrastructure between Mexico and the U.S., linked by rail lines, ports and highways, despite uncertainty over the Trump administration’s implementation of high tariffs on imports from Mexico. Buyers “see what’s coming,” he says. “They’re getting in right now on a lower multiple, with the expectation that that will increase.”

By contrast, the slew of disruptions that plagued supply chains in the last five years has had something of a chilling effect on M&A in transportation and logistics. It has served to delay deals while not quashing them altogether, Capin-Gally says. Despite those concerns, however, “most of our clients are viewing this as a great opportunity.”

New technology for the supply chain offers yet another factor that’s driving M&A in the sector. The buyers are companies looking to equip acquisition targets with the state-of-the art information and material handling systems that are needed to become more efficient and compete in the marketplace, Capin-Gally says. “There’s a push to sell to companies that have this tech.”

The preponderance of M&A deals in the sector is occurring regionally, as buyers especially look to take advantage of transportation and manufacturing infrastructure in Mexico. Most of the money is going toward the acquisition of asset-based transportation and logistics providers, Capin-Gally says.

While he acknowledges the economic uncertainty caused by tariffs and growing trade tensions, Capin-Gally doesn’t believe that it has derailed M&A activity. “We’re optimistic about the next few years,” he says.