Introduction
Merger and acquisition are the critical processes; therefore, they need proper planning, preparation, and collaboration. As merger and acquisition practitioners are expected to evaluate the load of company data that is involved in transactions, there has become a much greater need to use technology as it enhances and streamlines the deal sourcing process.
In this article, we will explore the role of technology in mergers and acquisitions.Origination, the latest trend in this area, and the tools that dealmakers are using to stay ahead of the curve.
Some of the specific ways that technology is helping the merger and acquisition process:
In the past, sourcing new deal opportunities for mergers and acquisitions was a very difficult and time-consuming process that relied heavily on personal networks. Historically, finding new M&A deal opportunities was also a backbreaking, long process that relied heavily on personal networks.
Largely as a result of the lack of access to almost all data (that can now be easily obtained) on corporate financials, leadership teams, raising capital history, and comparable company valuations, investors had to dig through gigantic volumes of unstructured datasets looking for potential investment opportunities.
Now-a-days, With this huge amount of data being available regarding completed M&A transactions and industry trends, dealmakers have been able to now use this data to structure and value future transactions and even predict potential areas of disputes through various technologies.
In fact, social media platforms such as Twitter and LinkedIn now play a significant role in the M&A planning, particularly in sourcing deals.
Through this fast combination of current information with Due Diligence tools to help in analysis, this otherwise very tedious and painstaking process is now streamlined. They can easily identify target companies based on solid data rather than intuition.
What took months of manual labor in terms of doing the research can now be done in seconds, allowing investors to consider the multiple factors and their impact on one another when making potential investment decisions.
For instance, technology can allow the investors to see the work history of the executives, patents filed, amount of capital invested in any specific area, number of lines of business supported, the education of the founding team, and even the experience of investment partners. Technology can speed up the negotiation process of deals and make the valuations more accurate.
Trends and tools to watch in M&A
Clearly, technology has been increasingly playing a giant role in providing tools and resources to dealmakers for identifying, evaluating, and effecting potential deals. Some of the emerging trends that every M&A deal maker should watch out for are as follows:
Artificial Intelligence Tools
The simplest applications of AI are probably among the most powerful. Being able to sift through complex contracts and papers to find just the right text, data, or context has become increasingly crucial in recent years.
Traditionally, this sort of labor included teams of reviewers working over the material for weeks or months as part of the due diligence process. Such a practice would significantly suck resources and was costing hundreds of thousands of dollars at a time.
AI and ML development services have made it so the critical information can be easily retrieved using software, with accuracy at a level that even the most expert legal professionals would find satisfactory.
This includes the lease obligations of a corporation—after all, companies are documented to have several hundred leases at any given time—details of contracts with internal and external stakeholders, and many more potential risk areas, including compliance, dispute resolution, and pending litigation.
Data Visualization Software
Given the voluminous nature of data collected before a business transacts in its due diligence process, the process becomes too cumbersome and dysfunctional without having a means to synthesize it quickly enough to interpret results and outcomes.
This could be offset by using data visualization tools, such that numerical and textual data is translated into easy-to-understand charts, graphs, tables, maps, and more. Data visualizations can be implemented at any step of the deal-making process: origination, execution, or integration.
Project Management Software
Even though technology clearly makes M&A deals less difficult for dealmakers, the volumes of tasks involved in the process—particularly due diligence—are swelling.
Overcoming this challenge can be done with the use of project management software that organizes tasks and helps keep track for businesses. Such software could deal with the intricate complexity of managing several M&A deals at one time—organizing and managing information and tasks based on one’s needs through all of the transactions.
It can be applied for prospecting, due diligence, and transaction management. With the help of the software, companies can track all the necessary documentation and gather feedback from the right team members. For instance, it can create individual requests and projects for each member of the team, enabling companies to have greater insight into every part of the due diligence process and to manage the transaction more efficiently.
Conclusion
Major technology companies such as Microsoft, Adobe, Facebook, and Apple have all been heavily involved in mergers and acquisitions. For instance, Adobe Acquisition of Figma, Microsoft Acquisition of LinkedIn, and Facebook Acquisition of Instagram are prime examples of this trend.
One of the marked changes the M&A process has seen through technological advancement is the rise in deal volume. Companies can now access, collect, and analyze huge amounts of data in real time so that they can make informed decisions or identify attractive targets for acquisitions.