Why M&A Dealmakers Need to Embrace Technology — Now
Technology is reshaping how M&A transactions are done, bringing speed and efficiency at every stage in the deal lifecycle. Here’s why adapting to the new world can give a deal team a competitive advantage.
6 October 2020
When I first started in banking, I spent my days lugging around a banker's box full of files. We all did. The managing directors would say that they wanted to see “the whites of people's eyes” in the data room. We had to be there, physically hustling in front of our bosses. Those of us who remember those days laugh about it now.
The shift to digitization started 20 years ago and the virtual data rooms (VDRs) we use today are a tremendous upgrade, to say the least. Mergers and acquisitions (M&A) practitioners now know that digitization across multiple industries isn’t just an improvement to workflow — it’s a boon for M&A as a discipline.
Yet, there can still be some resistance. Some managers are hesitant to change existing, more traditional processes because they work. After all, why fix something that isn’t broken?
More and more, technology serves as a differentiator for a lot of these firms; enabling them to run their deal processes more effectively and relay information faster to clients.
Look, I love Excel. You love Excel. Excel has proven itself consistently over many years to be a powerful and reliable tool. But let’s face it: there have been times when we’ve asked it to do things that Excel is just not designed to do — like deal marketing or task management.
When organizations try to force these other tasks into Excel, they’re suddenly faced with a cumbersome tool that perpetuates lingering inefficiencies across many phases of the deal lifecycle. We’ve all been there — struggling to coax actionable insights out of a spreadsheet that’s already been taxed beyond its limits. These are the areas for which we should be seeking better technological solutions.
Make a change for the better
So why not make a change? Well, sometimes change is scary. When managers are moving from deal to deal, the last thing they want to do is potentially disrupt their workflows, put things on pause, and try to get up to speed on some new tool. I hear this from clients over and over. They’d rather “get by” and keep the ship sailing rather than drop anchor and fix the rigging. However, the moment they realize that these new technologies are complementary and that their workflows won’t be disrupted, acceptance comes quickly.
Perception can be another holdup. Firms need their clients to know that they’re doing the hard work required to find that perfect buyer in the marketplace. If they’re using a deal marketing tool, the perception might be that they’re taking shortcuts and letting the tools do the work. There can be skepticism around the efficacy of this new technology.
But here’s the thing: when it comes to deal marketing, for example, investment bankers often struggle to gather information and relay it to their clients. If it’s early in the deal lifecycle, a client will be especially hungry for any updates they can get. Traditional processes make those updates particularly laborious to produce, with lots of follow-up calls and emails required. Technology, on the other hand, makes it easy to see who's read the teaser or reviewed the CIM without picking up the phone. Digital tools offer a level of intelligence that traditional methods simply can’t duplicate — while freeing up the team to do more deep work on the deal. And at the end of the day, clients appreciated the rapid insights that the firms can now turn around.
Gain a competitive advantage
M&A practitioners don’t want to just “get by” anymore. They realize that there are better ways of doing things and the benefits have been borne out time and time again. These days, we all see the switch to virtual data rooms as a significant one. And now organizations are exploring transformation in other aspects of the deal lifecycle as well.
Deal marketing, buyside due diligence, post-merger integration — these are all areas that technology can successfully streamline. More and more, technology serves as a differentiator for a lot of these firms; enabling them to run their deal processes more effectively and relay information faster to clients. The efficiency of technology is worth the brief discomfort of change.
And of course, nobody misses lugging around those big banker’s boxes.