I spend most of my (working) life thinking about Technology M&A – unicorns, decacorns, software, adtech, that’s my world. But, until this week, I hadn’t given very much thought to just how much Technology has reshaped the world of M&A, even in the lifetime of my own career (around 15 years).
This week, it was announced that virtual data room business HighQ has completed a $50m funding round from investors including Morgan Stanley and Goldman Sachs. HighQ is just one example of a new breed of technology business that is changing the way that we do deals. Even though it is relatively recent history (and, in some cases, actually not even history), it seems strange to imagine a world in which data rooms were an entirely physical affair, where buyers waited their turn for access and camped out to scour real-life files for essential transaction detail.
And data rooms aren’t the only way in which the world of M&A has changed. E-mail and collaboration tools have made it possible for companies in completely disparate locations to communicate and exchange information at the touch of a button. Online databases have made it possible for us to find out that a US business bought something exactly like the business we’re selling and to therefore widen our client’s potential buyer pool exponentially. A 2013 Intralinks survey found that 55% of dealmakers use online networks for deal sourcing and social media has become part of the due diligence process.
Needless to say that there are some aspects of a deal which technology can’t touch. In spite of our increasing preference for electronic communication, it would still be extremely rare (although not unheard of) for a buyer to buy a business and buy into a management team that they had not physically met. It’s hard to imagine anything which can shortcut that need for a human side to a process or which can automate the softer issues.
When I look back over the last 15 years in Corporate Finance, it’s very clear to me that technology has completely reshaped the market – as it has done in most industries in fact. What is less clear is whether it has made our lives any easier. Whilst we buy into tools that automate previously painful processes, those same tools also allow us to run processes with so many more possibilities that any time saving is probably negligible.
My conclusion? Technology has not made the world of M&A easier but perhaps it allows us to get to a better solution for our clients, which hopefully means everyone’s a winner.