Veteran M&A Dealmakers Wax Poetic on Industry Trends and Strategies
Seasoned industry veterans met to discuss results of recent M&A community polling.
12 June 2019
Last year SS&C Intralinks partnered with the M&A Advisor to co-launch Out IN Front, an M&A industry poll created for and by dealmakers. At the end of each three-month poll, a task force of esteemed dealmakers share their insights on the data collected.
At the most recent Out IN Front task force meeting held in late May, task force members gathered to review poll results and provide analysis on industry trends and strategies. In attendance were David Fergusson, Cesar Anquillare, Chris Nutall, Jack Butler, Ian Fay, Terry Mackin, Pavle Sabic, and Intralinks’ Brian Hwang (pictured above). Considering the action-packed nature of today's market, there was a lot to cover. Here are four important takeaways from the meeting.
1. Timing is important – but not everything
In a winner-take-all environment, companies are looking for ways to go to market more quickly. Chris Nutall, managing partner at Laird Partners, pointed out that as cycles get shorter, M&A becomes a viable strategy for businesses to enter into a certain market. Acquiring another company allows a company to expand much more quickly than if it built that capability itself. However, he cautions, potential acquirers must evaluate the build vs. buy tradeoff and weigh the costs associated with each before going forward with the deal, even if it means entering the market at a later time.
2. Proceed with caution
The consensus of the task force is that we are in a seller’s market, marked by continuing robustness and higher than usual deal price tags. The elevated valuations make it critical that buyers be strategic about their acquisitions and what they invest in. Buyers are prioritizing the range of targets available to them to capitalize on the most strategic fit. As a result, we are seeing a reduction in deal flow as buyers are holding back to wait for that ideal scenario.
3. The age of the customer
Chris Nutall also noted that the concept of a platform is becoming increasingly important. Platforms allow companies to easily scale since they don’t have to constantly build custom work for clients. Customer-driven distribution is a viable option for customers to satisfy customers by leveraging customer preferences and similar data. As a result, we are moving away from capability-driven M&A, and more toward customer-driven distribution. Information is becoming the commodity that is driving a substantial number of high-value deals.
4. The attraction of cross-border M&A
Trade tensions and changing policies have posited a cloud of uncertainty over international M&A activity. Yet, Cesar N. Anquillare, chairman and CEO of Winchester Capital, said there’s a silver lining: the decrease in the corporate tax rate arms companies with more capital to acquire abroad. And although many U.S. companies are proceeding with caution on cross-border deals, acquisitions in the U.K. are especially appealing now considering the decrease in deal value in the market.
Despite the uncertain nature of today’s M&A environment (a “vortex of volatility” as described by task force member Paul Aversano), the dealmakers agreed that behind every successful deal is a definitive corporate strategy for growth. Sure, there’s risk to every transaction, but every dealmaker worth their salt knows that having a well-crafted game plan improves the odds of a successful outcome and the potential for creating value for shareholders.