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How New M&A Technology is Transforming the Way We Execute Deals

Kison Patel
CEO and Founder of DealRoom
Kison Patel

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

CEO and Founder of DealRoom

Technology and M&A have always gone hand in hand.

The largest technology firms in the world - Google, Microsoft, Apple, and Facebook - have all been highly active in transactions over the past two decades and owe at least some part of their success to M&A.

Think Google’s acquisition of Youtube, Microsoft’s acquisition of LinkedIn, and Facebook’s acquisition of Instagram, as three prime examples. 

With M&A practitioners now expected to value the companies involved in these transactions, it follows that investment banks should be taking advantage of some of the same technology that underpins those businesses.

In this article, DealRoom looks at some of the software that is transforming how M&A is conducted.

Far from being just a sideshow in transactions, technology now has the potential to add millions of dollars to deals when applied in the right circumstances.

Artificial Technology

One of the most powerful applications of Artificial Technology (AI)  in recent years has been the ability to trawl through complex contracts and documents, searching for relevant text, figures, or context.

This kind of work is a mainstay of the due diligence process and previously involved teams of reviewers poring over the details for weeks and months at a time. This was a huge drain on resources, costing several hundred thousand dollars at a time. 

Thanks to ai and ml development services, the relevant data can be quickly pulled through software at a level of accuracy that even experienced legal personnel would be satisfied with.

This includes detail on the lease obligations held by companies (large companies can typically be expected to have several hundred leases at a time), the terms of contracts with internal and external stakeholders, and a range of other potential risk areas such as compliance, dispute resolution, and pending litigations. 

Data Visualization Software

As one experienced M&A practitioner told DealRoom in a podcast about M&A technology trends, many companies are using up to forty or fifty different sources of data to drive their operations.

There’s only so much data any buyer can feasibly make sense of, even if, paradoxically, every extra datapoint adds some extra value to the overall picture.

The way around this is utilizing data visualization software, which converts Big Data into digestible, visual chunks for buyers to consume.

This has applications right across the deal life cycle. At the origination stage, company criteria can be broken down into visual comparisons.

At the due diligence phase, key trends that might not otherwise be identified can be picked up by data visualization, such as spikes in invoices during certain periods, or downturns in others.

At the integration phase, the software can be leveraged to provide suggestions about where weaknesses are likely to arise based on the feedback garnered in employee satisfaction surveys.

Drone Technology

If you’re sitting at your desk at your office one morning and a drone flies past the window, don’t worry - there’s a good chance it’s not industrial espionage. Goldman Sachs announced in 2020, at the height of the Coronavirus pandemic, that it was using drones to provide potential buyers a ‘birds eye view’ of target companies’ operations.

This could include industrial units, factory floors, big box retail units, or even just places off bounds because of Coronavirus restrictions.

What emerged from the experience across hundreds of drone outings is that it is just as effective - and far less time-consuming - than visiting a site in person.

When combined with teleconferencing equipment such as Zoom, company members from across several geographical locations can “visit” sites in real time together.

At a time when company chiefs are coming under pressure to cut down on the air miles driven up during M&A dealmaking, the drone offers a ready made solution.

Project Management Software

Although technology has undoubtedly eased the burden for investment bankers, the complexity of deals - particularly in the due diligence phase - means that the number of tasks involved continues to grow.

A typical middle market M&A transaction can now involve close to 50 different participants, each with something to contribute in the form of authorization, documentation, or just feedback.

This generates a sprawling mass of information, all relevant to a greater or lesser extent.

M&A project management software such as DealRoom has emerged to address this complexity.

It enables M&A teams to track the progress of several deals at once, gaining oversight of different parts of the due diligence process, to generate progress dependencies, and to create individual requests for individual members.

It’s arrival is the point at which virtual data rooms transition from mere storage to becoming catalysts in deal closing.

Conclusion

Several elements to an M&A transaction make it a fundamentally good match with technology: finding suitable target companies based on solid data rather than just a hunch, the intense attention to detail, the time required to bring a deal to close, and more.

It should come as no surprise then that each part of the M&A journey now has some form of technology that can dramatically enhance the process for everybody.

If experience is anything to go by, this trend will only continue in the years ahead.

dealroom

Technology and M&A have always gone hand in hand.

The largest technology firms in the world - Google, Microsoft, Apple, and Facebook - have all been highly active in transactions over the past two decades and owe at least some part of their success to M&A.

Think Google’s acquisition of Youtube, Microsoft’s acquisition of LinkedIn, and Facebook’s acquisition of Instagram, as three prime examples. 

With M&A practitioners now expected to value the companies involved in these transactions, it follows that investment banks should be taking advantage of some of the same technology that underpins those businesses.

In this article, DealRoom looks at some of the software that is transforming how M&A is conducted.

Far from being just a sideshow in transactions, technology now has the potential to add millions of dollars to deals when applied in the right circumstances.

Artificial Technology

One of the most powerful applications of Artificial Technology (AI)  in recent years has been the ability to trawl through complex contracts and documents, searching for relevant text, figures, or context.

This kind of work is a mainstay of the due diligence process and previously involved teams of reviewers poring over the details for weeks and months at a time. This was a huge drain on resources, costing several hundred thousand dollars at a time. 

Thanks to ai and ml development services, the relevant data can be quickly pulled through software at a level of accuracy that even experienced legal personnel would be satisfied with.

This includes detail on the lease obligations held by companies (large companies can typically be expected to have several hundred leases at a time), the terms of contracts with internal and external stakeholders, and a range of other potential risk areas such as compliance, dispute resolution, and pending litigations. 

Data Visualization Software

As one experienced M&A practitioner told DealRoom in a podcast about M&A technology trends, many companies are using up to forty or fifty different sources of data to drive their operations.

There’s only so much data any buyer can feasibly make sense of, even if, paradoxically, every extra datapoint adds some extra value to the overall picture.

The way around this is utilizing data visualization software, which converts Big Data into digestible, visual chunks for buyers to consume.

This has applications right across the deal life cycle. At the origination stage, company criteria can be broken down into visual comparisons.

At the due diligence phase, key trends that might not otherwise be identified can be picked up by data visualization, such as spikes in invoices during certain periods, or downturns in others.

At the integration phase, the software can be leveraged to provide suggestions about where weaknesses are likely to arise based on the feedback garnered in employee satisfaction surveys.

Drone Technology

If you’re sitting at your desk at your office one morning and a drone flies past the window, don’t worry - there’s a good chance it’s not industrial espionage. Goldman Sachs announced in 2020, at the height of the Coronavirus pandemic, that it was using drones to provide potential buyers a ‘birds eye view’ of target companies’ operations.

This could include industrial units, factory floors, big box retail units, or even just places off bounds because of Coronavirus restrictions.

What emerged from the experience across hundreds of drone outings is that it is just as effective - and far less time-consuming - than visiting a site in person.

When combined with teleconferencing equipment such as Zoom, company members from across several geographical locations can “visit” sites in real time together.

At a time when company chiefs are coming under pressure to cut down on the air miles driven up during M&A dealmaking, the drone offers a ready made solution.

Project Management Software

Although technology has undoubtedly eased the burden for investment bankers, the complexity of deals - particularly in the due diligence phase - means that the number of tasks involved continues to grow.

A typical middle market M&A transaction can now involve close to 50 different participants, each with something to contribute in the form of authorization, documentation, or just feedback.

This generates a sprawling mass of information, all relevant to a greater or lesser extent.

M&A project management software such as DealRoom has emerged to address this complexity.

It enables M&A teams to track the progress of several deals at once, gaining oversight of different parts of the due diligence process, to generate progress dependencies, and to create individual requests for individual members.

It’s arrival is the point at which virtual data rooms transition from mere storage to becoming catalysts in deal closing.

Conclusion

Several elements to an M&A transaction make it a fundamentally good match with technology: finding suitable target companies based on solid data rather than just a hunch, the intense attention to detail, the time required to bring a deal to close, and more.

It should come as no surprise then that each part of the M&A journey now has some form of technology that can dramatically enhance the process for everybody.

If experience is anything to go by, this trend will only continue in the years ahead.

dealroom

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