Predictions for the M&A Sector in 2024

A Look Back at M&A in 2023

Last year, Slalom completed a survey with over 150 companies respondents.  When asked where they are with their deal value realization. Surprisingly enough, they found that a whopping 44% of companies lose track of their synergy goals. So why does this happen?

Here’s the harsh truth. When two companies come together, the focus initially lies on the value proposition, the deal thesis, and the synergies expected from this union. It's a compelling narrative presented to the board, who then gives their nod of approval. But this is just the beginning. The real challenge begins with the operational due diligence followed by the integration phase. 

A common oversight in this journey is the way M&A teams are structured. Typically, these teams are formed along functional silos, one for business development and a separate team for integration, each led by functional leaders armed with their specific playbooks. These playbooks, loaded with checklists, are primarily focused on integration execution. The problem is, they lose sight of what’s truly important - the deal’s value. 

We at DealRoom saw this siloed nature of the M&A process, and wanted to revolutionize how it’s done. We’ve created an M&A platform designed for collaboration and responsiveness to power a faster, less expensive, and more aligned M&A lifecycle. Our mission is to optimize the M&A process, so more companies can realize deal value faster. 

Predictions for 2024

With the pandemic as an accelerant, technology has become more perfusive in every part of our daily lives over the past few years.  M&A is no different, and an increasing number of companies have started using technology and tools to improve their M&A process.  As for 2024, that number will increase even more, and we will see M&A leaders leverage disruptive tech & modern methodology into M&A. 

The evolving role of technology in M&A

Leveraging technology solutions like DealRoom, specifically tailored for deal value, is a game changer. It can accelerate the realization of deal value by directing focus on the most critical, often cross-functional, aspects. This strategic approach is no longer just a preference; it's a necessity.

‍“There is so much technology that can enable M&A and take the friction out of the process. It's time to move out of Excel, Google Sheets, and PowerPoint.” - Chris Von Bogdandy, Global Lead M&A Solutions at Slalom

When companies initiate an integration management office or engage in operational due diligence, they often overlook the sunk costs involved. For instance, hiring a consulting firm. They need to adapt to the company’s systems, which involves an adoption period. This incurs fees that, once spent, are gone for good. However, stepping in with a pre-configured, value-oriented solution can significantly speed up the integration process.

The long-term benefits are also substantial. Once a company starts using a technology like DealRoom, it's not just for a single occasion. Maintaining the license allows its use in subsequent deals, enhancing efficiency and familiarity.

In the world of mergers and acquisitions, time is of the essence. Every week that you can present a joint solution between the acquired and acquiring company is precious. M&A is fundamentally about speed, and technology is a critical accelerator in this race.

Technology & Methodology Unite: Slalom & DealRoom Strategic Partnership

To further expand the role of technology in M&A, we, at DealRoom, have decided to partner with Slalom. We love Slalom’s commitment to M&A excellence, and we believe that with our alignment of goals, we can take the first step towards a better fusion of methodology and technology in M&A.

Slalom uses a framework that translates the deal thesis into a synergy model to ensure team alignment. Their M&A framework mainly focuses on three things on every acquisition: Deal value, people, and technology enablement. 

Our mutual commitment to moving the M&A industry forward will start by embedding Slalom’s Synergy framework into DealRoom’s Integration product. The goal is to stay value-focused and also create an experience for employees, customers, and partners that makes sense for them during the integration.

Together, we will bring modern M&A processes and tools, disrupting the legacy M&A approach to offer the modern alternative for innovative deal-makers.

AI’s arrival in the M&A Space

With all the noise and hype that Chat GPT made over the last few months, I have no doubt that AI will play a larger role in M&A this 2024. With so many practical use cases, I strongly believe that this year, AI will breakthrough and be clear on how it can deliver value in M&A. 

Soon, AI will be able to help practitioners scan through diligence in a matter of minutes, and flag certain risks, depending on what the team is looking for. AI will also help search for documents inside data rooms. These are capabilities that are already existing in the Law industry, and will soon make way to M&A. 

Most exciting will be AI’s impact on Integration teams. I strongly believe that AI will soon be able to help track synergies during deals, and can analyze data from both companies to identify the best integration strategies. This will definitely increase the speed and efficiency of M&A teams working on deals. 

However, it is crucial to remember and understand that AI has its limitations, regardless of how wonderful and efficient it is. It has no intuition, which plays a vital role in some parts of M&A. Also, AI's effectiveness is heavily dependent on the quality and quantity of data. Inaccurate or biased data can lead to misleading AI insights.

Interest rate stabilization

Interest rates are also expected to stabilize, making funding more accessible for more M&A activity. The market still holds a significant amount of dry powder, and many companies are cautiously sitting on it.

Another trend that's gaining traction is divestitures. Numerous companies are scrutinizing their balance sheets, identifying non-performing assets or those misaligned with their strategic growth path, and considering monetization or spin-offs.

Conclusion

As we expect more deal activity, with the progression of AI and technology, we could see more process improvement from the acquiring companies. Leveraging technology nowadays is a must, in order to compete with those who do. With DealRoom and Slalom’s new partnership, we hope to bring everyone a streamlined process that is geared towards value creation and synergy realization. 

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