Tech-Enabled M&A 101
5 Ways Digital Transformation Will Shape the Future of M&A.
Digital transformation has quickly crept into almost every corner of the business world. When we imagine these processes, the first things that come to mind are often AI and automation to improve manufacturing operations or customer experiences. Or we think of IoT devices collecting Big Data and supercomputers creating captivating new analysis. We think of things that are designed to help businesses run more intelligently and efficiently.
So, if that’s the case, wouldn’t it seem obvious that we could also be leveraging digital transformation to buy businesses more intelligently and efficiently?
Tech-Enabled M&A does just that, by aligning people with digital systems that greatly expedite buy-side and sell-side processes, and enrich them with deeper, more accurate information than ever before.
As investment banks and private equity firms widen adoption rates, it will quickly become a story of the haves vs. the have nots, as manual processes simply cannot compete with the speed and precision of Tech-Enabled M&A.
Here are 5 ways we believe digital transformation will shape the future of mergers and acquisitions:
Analytics and Reporting
With Tech-Enabled M&A, advanced software tools automate the most labor-intensive aspects of reporting and analysis. Human error is removed from the equation, as is the need for manual tie outs and other busywork that can be done quickly and more efficiently in the digital domain. Automating these tasks will free up junior bankers from low-value activities so they can focus on delivering high-value results.
For private equity firms, Tech-Enabled M&A simply allows you to get smarter, faster. With next-gen analytics software, it is now possible to quickly drill into a potential acquisition’s data to spot risks and opportunities, instead of waiting days or weeks for the investment bank to fulfill your data requests. Quickly understand the true profitability of the business, the unprofitable areas, potential growth areas and more.
With Tech-Enabled M&A, you can easily beat competitors to the punch with your bid while they are still stumbling out of the gate. And with a more accurate view of the potential acquisition’s finances, you can feel confident in the pricing and transaction structure.
For investment bankers and potential portfolio companies, fulfilling the endless reporting and data preparation requests during a sale can be extremely difficult, without the right tools. As time goes on and Big Data analysis becomes more common, the requests may grow even more complex. Fortunately, Tech-Enabled M&A tools allows you to fulfill these requests in just a fraction of the time.
The ultimate advantage for investment bankers here is the ability to create greater competitive tension using the tools Tech-Enabled M&A brings to the table. As deals wear on, more and more buyers typically drop out of the picture. With the ability to present larger, more complex data sets and more quickly field buyer Q&A, Tech-Enabled M&A tools allow investment bankers to take more parties deeper into the process and generate higher sales multiples.
Big Data Analysis
One of the great advantages of digital transformation in M&A for both buy-side and sell-side operators is the ability to analyze Big Data. Tech-Enabled M&A tools allow clients to make sense of data sets that are far too large for Excel, such as point-of-sale data or syndicated data from Nielsen or IRI.
For private equity funds, this means yet another layer of depth in the analysis, possibly revealing insights and opportunities other buyers may have missed. For investment banks and potential portfolio companies, the software allows them to perform complex consolidations and reveal data-driven insights in advance of detailed buyer Q&A.
Dead Deal Avoidance and Revival
Using advanced software tools, Tech-Enabled M&A allows you to uncover potential financial issues before going to market. New analytics software allows you to slice, dice and drill down to find problems that can kill deal values or nix the sale altogether. You can now quickly triage and save deals that go sideways due to poor, cumbersome, complex data by providing clarity before things truly break down.
In the years to come, digital transformation will truly revolutionize the way businesses are bought and sold. As Tech-Enabled M&A gains traction in the market, early adopters will see perhaps the greatest advantage, as manual processes simply can’t compete with the speed, accuracy and depth of a team equipped with the proper technology.
What M&A pain points would you like to see technology solve? We’d love to hear what you have to say. Sound off on social media now and join the conversation.