Winning and Losing Faster, With Confidence.

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3 Ways Tech-Enabled M&A is Enhancing the Buy Side Process

For private equity deal teams, two things matter above all else: speed and certainty. To win, you need to beat your competitors to the punch. But every deal, win or lose, costs you money. And every day you’re in it costs more.

“You want to win and lose fast, and with confidence,” says MGMT3D Principal John Derus. “You don’t want to spend good money chasing bad deals. Some firms spend millions of dollars to lose out. When you go right to the end and you can’t go all in, because you’re just now realizing it’s a bad deal, you’ve spent a lot of money you’re not getting back.”

This is a risk you have to manage. Tech-Enabled M&A addresses the fundamental pain point many PE deal teams face every day – “How can we get to certainty faster?”

The answer, oftentimes, lies in analytics. Investment banks and management teams will do their best to provide data, but truly telling analysis and insights often require a more rigorous approach and can be time consuming. Tech-Enabled M&A shrinks these timelines considerably, turning around requests that used to take weeks or months in mere days or hours, with an even greater level of depth.

In turn, that removes risk exposure from several areas: it reduces your chances of being wrong, it reduces the time and money you’re sinking into the deal process, it allows you to act faster, and it gives you more time to be working on other deals.

Buy-side teams win by moving faster with certainty, and that’s exactly what we provide. Here are three ways Tech-Enabled M&A is currently helping to enhance the buy-side process for deal teams:

Prove or Disprove Your Investment Thesis

There’s a reason behind every potential acquisition. Perhaps you see growth potential. Maybe with a little work in the front office or some production optimization it could be a profitable asset. Our Tech-Enabled M&A tools can help you affirm or poke holes in that investment thesis and remove risks from the process by replacing assumptions with facts.

In a traditional M&A scenario, you’ll gather as much information as time allows and analyze it as best you can, but at a certain point you’ll need to lean on your gut. Tech-Enabled M&A removes that layer of guesswork by allowing you to ask very specific questions and quickly receive analysis that reveals the truth so you can move on to the next question and dig deeper.

On the flip side of that, you might not move forward on a deal because you’re not confident in your assumptions about it. We can come in and quickly prove or disprove those assumptions, as well. At the end of the day, Tech-Enabled M&A allows you to get to the underlying risks & opportunities of the deal faster and deeper, with more rigor around the process.

Perform Complex & Sophisticated Analytics

Our Tech-Enabled M&A tools allow private equity firms to rely on us to be their analytical experts. When it comes to complex and sophisticated analysis, data science, Big Data and difficult data insights, our team helps deal teams get deeper, faster.

“It might start with us reporting back what we found out from the data room for the company, but then we can also combine with external resources like 3rd party data and syndicated data to provide insights about white space, market share – external factors that aren’t as easy for people to see,” says MGMT3D Principal John Derus. “It’s diving very deeply into the internal information about the business, but also with the ability to overlay that with external information get a fuller picture, do deeper analytics and see the broader play.”

“We support their model build, which I think is an important part of the process,” says Vice President of Operations Michael Steward. “With buy sides, there really is no ‘standard.’ We might get a day or a week window and a very specific, one-of-a-kind type of request. Report creation, trend analysis, deep analytics – every one is a little different.”

Set Up the Business for Success

The vast majority of diligence work is normally throwaway work. In most cases, PE firms are spending millions of dollars for all these companies to come in and do all types of analysis prior to the sale. Or they might be paying people to come it and set up the financial reporting, or create an insight that was hard to get to. When the deal is done, they table it, it gets dust on it and they don’t leverage the value after they bought it.

“One major differentiator for us, at MGMT3D, is that what we’re doing has sustainable value post-close. We’re setting all this up, and this analysis flows right into the operational phase of the business,” says Derus. “People buy off these insights about running the business that they’re discussing during the sale process. We institutionalize that. All the value that was created during the process can be leveraged after the process, in order to accelerate your value creation after close. That is a huge game changer. People are used to throwing millions of dollars away just to get the deal done, and now it’s not a throwaway anymore.”

This is done through a deeper array of services from MGMT3D and our sister company, EBM Software. All of the data insights from the buy-side diligence process can easily be transferred into EBM’s Catalyst operational software, allowing the new asset to take a data-driven approach to optimization, with out-of-the-box reporting, analysis and planning/budgeting/forecasting. This ensures continuity between the insights you’ve found and future operations.

Furthermore, we offer a variety of executive services to help with the transition, including interim executives to help implement new systems and manage the business, strategic IT due diligence evaluation, M&A finance and accounting, strategy, post close transitions and transformations, 100-day plans, transition accelerators, and more.

“We’ve built everything into a system with processes around it,” Derus says. “Processes that support buy-side diligence, but then flow seamlessly into the operational side to ensure best-in-class support for our PE clients.”

What sort of buy-side challenges are you facing? Drop us a line or reach out on LinkedIn, we’d love to chat and discuss where we can help.

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