The Official Newsletter of Topsail Capital Advisors on All Things Mergers and Acquisitions.
Industry Overview: Transportation and Logistics
The U.S. transportation and logistics industry is undergoing a pivotal transformation in 2025, driven by stabilized freight rates, the reshoring of supply chains, consolidation among regional players, and renewed investor confidence. Despite lingering cost pressures and labor challenges, the sector is showing signs of a healthy rebound in both volume and valuation metrics.
Deal Counts and Total Value
Q1 2025:
- 34 U.S. T&L deals closed—a 33% decline from Q1 2024’s 51 deals
- Global T&L deals dropped to 107, down 19.5% YoY (from 133 in Q1 2024)
Q1 vs. Q4 2024:
- Deal volume was up slightly: 250 deals in Q1 vs 242 deals in Q4
Capital deployment:
- Q1 2025: ~$4.7B in M&A capital — a 59% drop from Q4 2024 ($11.5B) and 32% lower than Q1 2024 ($6.9B), reflecting a trend toward smaller deal sizes
Strategic and Cultural Patterns
Buyer Composition
- PE firms accounted for only 34.4% of deal count (lowest in 5 years) but contributed 59.1% of total capital deployed—indicating focus on fewer, larger transactions
Shift Toward Smaller Deals
- Lower-middle market (≤ $50M deal) grew to 54.8% of volume
- Upper-middle ($500M–$1B) constituted 9.7%
- Large deals (> $1B) fell to 0% in Q1 2025 RL
Notable Transaction in T&L
- Union Pacific proposed acquisition of Norfolk Southern (~$85B transaction)—if approved, this would form the first coast-to-coast railroad with ~50,000 miles of track and expected enterprise value exceeding $250B; projected $2.75B in annual synergies
How the Union Pacific-Norfolk Southern Merger Will Affect Logistics
The prospect of a transcontinental railroad was first realized in 1869 with the hammering of the golden spike; this moment signified the beginning of efficient East to West transportation. As the golden age swung into effect, rival railroads sprang up across the United States, vying for control over the transportation market. Per Esther Fung’s recent article in the Wall Street Journal about the prospective merger of the Union Pacific and Norfolk Southern railways, not one company has controlled the East to West market completely. While the transaction is in the process of being legitimized by government officials and the respective unions involved, it marks the beginning of the first all-American railroad with complete coast-to-coast ownership. This deal is projected to solve an efficiency bottleneck previously experienced within the transportation industry. Jim Vena, CEO of Union Pacific, asserts that trains will become a more logical solution for those in need of transportation services as a result of fewer interchanges being thrown into the equation.
Opportunities: Broad Scope
The question lies, what effect will the trucking side of the transportation business experience? While Vena suggests that this will negatively affect the demand for long haul trucking, there are some opportunities for more niche transportation firms. First Mile/Last Mile centric companies will have a leg up with a boost in rail traffic, more efficient freight- more opportunities for business. Trucking companies that specialize in time sensitive, hazardous, valuable, or short haul goods may find their respective niches garner more value. This may also mean more strategic partnerships between larger transportation companies and the prospective new railroad. Acquisitions of small to medium trucking companies could experience an uptick as larger logistics companies seek more exposure to rail hubs.
On a Local Level
In a smaller lens, this deal may affect the Greenville-Spartanburg area uniquely. The upstate was famously brought to prominence with the textile industry and the rails that linked raw goods from the south and the factories producing finished products in the north. Spartanburg is still known today as “Hub City” for that exact reason. This deal could lead to a shift in focus for logistics companies throughout the Upstate as well, along with the possibility of interest from larger logistics companies related to the acquisition of smaller firms. Topsail Capital Advisors has historically dealt with transportation companies in the business transaction process, and has completed several logistics and transportation-related deals this year.
Deal Spotlight – Axis Transportation
Transportation news hasn’t just been a national topic of concern for our team; the Topsail’s Greenville office has recently closed on a transaction with Axis Transportation, a hotshot trucking company here in South Carolina.
Beginning Steps
Nearly two years before the sale, our client came to Topsail seeking guidance on how to position Axis for a successful exit. With retirement as their goal, they partnered with our team to chart the right path forward. By introducing them to the right resources, both within and outside of our firm, we helped them present themselves as a well-prepared, market-ready seller. Through reducing their day-to-day involvement, organizing and refining their financials, formalizing growth plans, and staying closely aligned with our process, the client ultimately connected with the right buyer. Reaching the closing table starts well before a deal is in motion. It requires a careful assessment of the buyer pool, available lending options, and establishing realistic valuations. These steps typically begin months in advance. The time invested in gathering the necessary information and presenting it clearly is critical to achieving a successful outcome.
The Deal Process
In this transaction, a key challenge emerged when the SBA updated its Standard Operating Procedures nearly two months into Due Diligence. The SBA remains the primary financing option for entrepreneurs pursuing acquisitions with less than $1 million in Seller’s Discretionary Earnings (SDE), and following their underwriting guidelines is essential for closing deals in the small to lower-middle market. This shift required all parties to quickly adapt, and the Topsail team responded swiftly to keep the deal moving forward, even as the lending foundation beneath it was being redefined. Adjustments to seller notes, potential price changes, and the need to revisit major terms of the LOI meant reworking much of the deal at what should have been the final stages.
Transaction Closure
Thanks to close coordination with the buyer’s lender and ongoing communication facilitated by Topsail, the deal stayed intact. The ability of a representative to anticipate risks and guide solutions to unexpected challenges often separates success from failure. By remaining agile and proactive during late-stage negotiations, Topsail effectively steered the transaction to a successful close.
On This Day – Notable Mergers & Acquisitions in July
July 1
- 2010 – Google announces their acquisition of ITA Software, a flight information software company providing tech solutions to travel companies, for $700 million.
July 2
- 2015 – Heinz completes its merger with Kraft Foods, forming the Kraft Heinz Company, becoming the 3rd largest food company in the U.S. and the 5th largest food company in the world. After 10 years as a merged company, it was announced on July 11th, 2025 that Kraft and Heinz plan to split due to their stock underperforming since the mega-merger.
July 6
- 2020 – Uber announces their deal to acquire Postmates for $2.65 billion. Uber completed the acquisition in an all-stock transaction and integrated their U.S. operations.
July 9
- 2018 – Keurig Green Mountain and Dr Pepper Snapple group successfully complete their merger, forming Keurig Dr Pepper.
July 11
- 2023 – A large step was made towards Microsoft’s acquisition of Activision-Blizzard when the FTC’s request to halt the transaction was denied. Microsoft completed the acquisition later in the year for $68.7 billion, making them the 3rd largest gaming company in the world by revenue.
July 21
- 2021 – Salesforce completes its acquisition of Slack Technologies, Inc. for $27.7 billion with the goal of creating a new digital HQ that will let employees, companies, and government create success from anywhere in the world.
July 25
- 2017 – British American Tobacco completes its acquisition of Reynolds for $54.5 billion, a large transaction in the international tobacco trade.
- 2025 – OnPath Credit Union makes a deal to acquire Heritage Bank NOLA for $26 million, an interesting acquisition in which a credit union is expanding by acquiring an in-state bank.
July 28
- 2016 – Oracle announces that they have entered an agreement to acquire NetSuite, the first ever cloud company, for $109.00 per share in cash. (roughly $9.3 billion)
July 30
- 2020 – Brookfield Renewable completes its merger with Terraform Power, creating one of the largest integrated pure-play renewable energy companies in the world.
On a Lighter Note: The Coffee Clause
In a recent middle market software company acquisition, an advisory firm shared a story about a unique issue that was brought up by the sellers and their team. The sellers had spent a lot of time carefully curating their coffee selection for employees, purchasing expensive espresso machines and buying artisanal blends from Italy. The buyers in this transaction did not value the company’s existing culture as much as the previous owners, supplying their employees with standard drip coffee out of a regular old coffee machine.
When the sellers noticed this, they insisted that a clause be written into the deal to maintain their fancy coffee selections when the new owners take over. The buyers did not see the value in the added cost, but the sellers fought hard, using their employee retention rates and recent uptick in productivity as evidence that their coffee was a net positive. Afraid that the deal would fall through and company culture would suffer heavily if they did not agree, the buyers agreed to the clause and went on to complete the deal.
A takeaway from this story is that seemingly small details can become deal-makers or deal-breakers, and things that may seem insignificant can play a massive role in deal coordination.
About Topsail Capital Advisors
Topsail Capital Advisors specializes in helping owners of privately held mid-sized and lower middle-market business owners value and sell their companies. Our team provides expert guidance throughout the M&A process to ensure owners achieve the best possible outcome for their exit.
For more information, visit topsailcapitaladvisors.com or reach out to us at admin@topsailcapitaladvisors.com
Stay tuned for next month’s insights!