How Technology Is Helping Companies Be Deal-ready for M&As
How to maintain flexibility with the right digital tools during M&As in a volatile market.
Companies often operate across digital ecosystems that have been historically fractured by disconnected interfaces, and these siloed operations increase the risk of misalignment and the loss of value. Embracing the right digital solutions can help companies succeed in economic uncertainty, discusses Doug Cullen, chief product and strategy officer, Datasite.
Digital transformation is industry agnostic and is more important than ever to maintain organizational flexibility in volatile markets.
Born out of necessity during the pandemic to ensure business resilience, the acceleration and adoption of digital transformation is here to stay. Chief executive officers say it’s the single most important trend on which they must act this year, ahead of economic and geopolitical risks, and many plan to acquire or invest in artificial intelligence (AI) to automate tasks to improve efficiency and to connect and analyze data so their companies can position themselves for success, while driving down costs.
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The Spread of Digital Transformation
No industry is unaffected by this trend, including mergers and acquisitions (M&A). These newer technologies are transforming and speeding up the process of managing M&A by automating repetitive tasks, powering data analysis, and easing processes across all phases of a deal, including pipeline management, outreach, preparation, and due diligence.
Still, the prospect of making a deal in an uncertain economic time can be daunting. But the reality is that M&A is now a regular part of doing business, requiring a constant state of readiness. And with so much dry powder on balance sheets and many companies looking to transform themselves, deals are getting done.
Whether a company is or is not on the verge of buying or selling, using the right technology can help organizations stay primed for opportunities and the ability to pivot fast in any direction.
For example, the capabilities of AI are unmatched when it comes to sifting through extensive volumes of data and content to inform decision-making. In a matter of minutes, as opposed to weeks, an AI engine can redefine how thousands of files are digested for dealmakers. Where an investment banking analyst might have spent weeks at a time analyzing, organizing and categorizing the thousands of documents needed for review by potential investors or purchasers, now AI powered tools in a virtual data room, where digital M&A documents and artifacts are securely stored, can perform the job in seconds, simultaneously reducing human error and ensuring better regulatory compliance.
This is important because every week that due diligence drags on, the risk of a deal coming apart increases by 49%. And with the price of due diligence at around $100,000 a week, costs can add up quickly if there are delays.
Deal Teams Under Pressure
With workloads that have increased due to challenging market events, dealmakers are also under unprecedented pressure. In today’s always-on environment, they must manage more with less from anywhere at any time. Here again, technology can help. Having one place to manage every stage of dealmaking gives dealmakers the flexibility to better manage their costs, reduce compliance risks, and increase their productivity.
With so many deal teams running both buy- and sell-side transactions at the same time, one platform with seamlessly connected applications that can handle every transaction type and every phase of the deal simultaneously, from sourcing to integration, means dealmakers can easily and quickly source their next opportunity, move through due diligence, close their deal and secure their data for future transactions.
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In another example, with bolt-on or tuck-in acquisitions, the strategy of choice for most dealmakers is having a healthy pipeline. This strategy requires following a disciplined investment thesis for every acquisition and prioritizing the ones that will help build market share or enter an adjacent market. Creating repeatable deal playbooks can help. Purpose-built applications can also make the deal pipeline management process more efficient and effective.
Anticipating and Adapting to Deal Trends
Typically managed through outdated tools, such as spreadsheets and email, which are subject to version control issues and missed messages, there are now pipeline tools that can help dealmakers visualize, compare, and assess various inputs and data sets. This means potential targets can be compared, touchpoints and progress can be tracked, documents stored, and communication made easier, decreasing deal risks and the potential for missed opportunities. With tools made for the task of managing a pipeline, raw data becomes consumable information, which informs a decision, all in the space of a few clicks.
As the Fourth Industrial Revolution continues to unfold, successful M&A deal makers understand that the business environment is more complex and less predictable than ever. Anticipating and adapting quickly will be key. Innovations in technology, processes, and data-driven insights, hold the keys to successful dealmaking.
How are you adopting digital transformation to be deal-ready when necessary? Share with us on Facebook, Twitter, and LinkedIn.
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