How online platforms can maximise deal success in 2024
Building a trusted network is key to successful M&A deal origination but doing so takes expertise, focus, and a great deal of time and effort. Even then, finding the right buyer or seller can still prove challenging. This can be especially true when M&A dealmaking is not your primary activity. From cold calling and selective pitching to scanning company websites and the media, uncovering the right partners can feel like finding a needle in a haystack.
But stripping your search back too far risks missing the perfect deal candidate. With so much information and with many unknowns, it is easy to see how time (and costs) can run out of control or momentum or a particular opportunity can be lost, even to the point of failure. Indeed, some research suggests that the deal failure rate for M&A transactions can be as high as 80%.
For financial intermediaries whose existing and trusted relationships enable them to source a handful of M&A deals a year, easy access to a live insights platform that incorporates the ability to seamlessly source and connect with qualified and relevant potential deal partners can represent a huge opportunity. It’s due to this clear logic that M&A networking and deal matching is increasingly migrating to online M&A deal platforms.
Get all potential candidates on your radar
Networking databases can take years to grow organically and require constant attention to nurture and keep up to date.
Joining a dedicated online M&A platform can solve this problem by providing immediate access to a deep pool of both buy- and sell-side partners. Overnight, financial intermediaries can expand their network to include a wide selection of relevant and targeted individuals and teams across multiple geographies. Digital deal sourcing facilitates the process of cross-border deals by introducing you to candidates outside of your local network. Additionally, using online deal sourcing platforms can be less expensive and more efficient than an in-house origination team.
Be an expert in the field
For deals to be successful, financial intermediaries must be experts in their field. Finding the perfect fit for your client means staying up to date with what’s happening in the M&A market not only at home but also abroad.
Online platforms aim to bring much-needed transparency to a market and a process that has historically been shrouded in mystery. Quality information can quickly support users in building a realistic and benchmarked view of any potential opportunity. The absence of such intelligence can lead to poorly informed decision-making, wasted time, and potential deal failures.
For large deals, the candidate pool is relatively small and this makes it easier to assess all potential opportunities, but for the mid-market - where the volume of potential candidates will be much higher - having a platform that provides targeted and relevant data is invaluable.
Access to this type of knowledge immediately improves expectations management (on both sides) and increases the quality of deal dialogue which, in turn, maximises the probability of deal success and reduces the execution time frame.
Outside specific deal opportunities, online platforms can deliver real-time intelligence and data-driven insights on the latest investment strategies, trends, and innovations across the M&A market. Choosing the right online M&A platform becomes self-fulfilling for users — better data, greater transparency, and targeted communication lead to improved decision-making and increased collaboration which drives growth and innovation and more deal opportunities.
AI in deal sourcing
With the surge of Artificial Intelligence, M&A professionals can benefit in many ways. Forbes’ recent article states that not only will AI help M&A professionals with due diligence, and valuations. It can also help speed up the post-merger integration process.
In the September 2023 European M&A Monitor, M&A professionals were asked about the expected value of AI for various M&A processes. The results showed that 81% of advisors expect AI to have little to significant added value for identifying off-the-market opportunities, and 83% expect little to significant added value for faster target evaluation.
If you are interested in knowing more about the impact of AI on M&A activities, you can watch Dealsuite’s webinar here. In this webinar we dived into the AI hype-cycle, the amplification of AI, and explored the profound impacts of AI, navigating through its benefits and challenges in the M&A sector, and software development sector.
Systematic deal discovery – proactively seeking out optimal partners
Manually sifting through potential deal partners can be laborious and time-consuming. Overcoming these hurdles can still lead to a dead-end if you are not up to date on a potential target’s focus and appetite to make a deal. Having a shared online platform means that you are alert to a particular target’s requirements - and any changes to those requirements – in real time. No more cultivating relationships that will never come to fruition.
Boost sell-side origination
An online platform accelerates deal sourcing and marketing to find the optimal matches more quickly. For sell-side deals, they enable quick introductions to buyers that are actively seeking opportunities like yours. Deal profiles can be created using pre-selected criteria – for instance, growth, profitability, or customer type - and a targeted list of potential buyers based on financial, strategic, or cultural fit is generated. Instead of going out to broader tender, users need only share the full deal profile with buyers that are suitable to move forward.
For the buy-side, this connectivity results in more actionable opportunities. Instead of watching emails or waiting for phone calls, an online system can automatically alert you when a user posts a deal that meets your acquisition criteria. By keeping abreast of all opportunities in real time you will never miss a deal again. You can also rest assured that your firm’s investment proposition is always visible to the right sellers.
Ideally, an online platform proactively supports this activity by constantly monitoring, recording, customising, and filtering market activity against detailed, pre-defined deal criteria. This market referencing then allows our unique matching algorithm to ensure all deal opportunities land quickly and directly with relevant and qualified contacts, and/or firms, in the right geographies.
Secure and direct communication
Far from a scattergun approach, online M&A platforms offer a consolidated solution, making the process more efficient and transparent for all parties. Sharing the same system leads to a standardised approach, saving time and increasing collaboration. It also creates an environment where both parties can be on the same page from the outset. Ultimately, an online platform provides a user-friendly and secure environment in which users can communicate about potential deal opportunities and parameters, both in and outside of their own country. One of the main factors for failed M&A deals is lack of structure and communication, a digital M&A platform can help avoid these.
When using a private platform, such as Dealsuite, information is only accessible to professionals who are registered members. All propositions are anonymous until you decide to proceed with a potential partner (and the relevant non-disclosure agreements are in place). Furthermore, the smart match-making algorithm suggests relevant buy side or sell side deals to you which match your project’s criteria.
By joining an online M&A network like Dealsuite, companies can establish a high-quality M&A process that diminishes the risks that come with the traditional approaches to deal management. With validated real-time data at your fingertips, and the opportunity to directly interact with qualified contacts, you are always in control of every deal's success.