All around us we see industries, markets and business models changing at a rapid pace. But when we look at the mergers and acquisitions market and the way acquisition processes are conducted, not much seems to have changed over the years.
Nevertheless, in this originally conservative market, there are certainly a few things happening in this area, some of which are outlined below.
Dealmaking is of course largely a people business: maintaining and expanding your network, bringing parties into contact with each other and of course negotiating. And it is nice to do this in a physical setting (person to person).
However, the recent period with more working from home for many people has taught us that online meetings also turn out to work in a basically traditional M&A market. Moreover, apart from online meetings, several digital tools are visible and/or under development in the M&A market. Through digital platforms, for example, it has been possible for dealmakers to link supply and demand for years. Or quickly access information/data on businesses around the world.
Virtual data rooms
And of course we are familiar with virtual data rooms, which have become indispensable in an acquisition process. Where, say 15 to 20 years ago, a due diligence team would often spend days going through thick files in a more or less locked office space, this part of the acquisition process has for years been largely digital and remote. In addition, due diligence teams are increasingly using algorithms and data analytics to analyze and interpret deal data from the digital data room.
An acquisition is and remains human work, but 'machines' can support
But also in the area of contracts, legal tech offers the possibility to draft and analyze agreements. There are many different tools available on the market that make the legal part of an acquisition process faster and more efficient.
Negotiation logic
And finally, a possible new application to support negotiations. In the market, tools are being developed by parties that link (simplified) data to be filled in (e.g. the desired price in an acquisition) to databases with so-called 'negotiation logic'.
Next, this tool creates an overview of the possible negotiation space and the zone within which a possible deal can be reached. The final deal, of course, is made at the negotiating table, where parties from 'person to person' implement their negotiation strategy. However, such a tool, partly based on game theory and logic, can potentially support this.
In short, M&A processes have also changed over the years and will continue to change. Perhaps not as fast as processes in other markets, but digitalization will continue to make its appearance in deal making. An acquisition is and will always be human work, but "machines" can support such processes, speed them up and make them more efficient. This presents opportunities for deal teams to partly redesign and challenge their work in a world that is increasingly digitizing.
