Leading cloud-based technology provider, Datasite, has launched its annual report, ‘The New State of M&A – An EMEA Perspective,’ a subsection of its global research project.
The report found that dealmakers in Europe, Middle East, and Africa lagged behind their peers in other regions when it comes to adopting mergers and acquisition processes that are digitally mature and technologically sophisticated.
However, they also recognise that new technologies will shorten the time it takes to complete due diligence, flagged as the most time-consuming phase of the process. According to the survey, company culture is a particular barrier to adoption in the United Kingdom, and cybersecurity concerns are the most common issue uncovered by due diligence.
Another key finding for the region is the importance of environmental, social and governance criteria as a consideration in M&A due diligence. Here, EMEA dealmakers diverged from their peers – while most dealmakers around the globe said ESG criteria “is an important” or “very important” consideration, notably, fewer EMEA dealmakers currently said this.
The report, carried out in conjunction with Euromoney Thought Leadership Consulting, surveyed over 2,200 M&A practitioners from corporations, private equity firms, investments banks, law and professional services firms across the Americas, EMEA and Asia Pacific on the current state and outlook for M&A – 860 of those surveyed practice in EMEA.
The findings showed that 67 per cent of EMEA dealmakers said the M&A process at their company will have a high level of digital maturity and technological sophistication by 2025, while 60 per cent said the same of the M&A process industry-wide.
This compared with 77 per cent in the Americas who predicted the M&A process at their company would have a high level of digital maturity and technological sophistication by 2025 and 71 per cent who said the same of the M&A process industry-wide.
In addition to new technologies enabling more robust data management and communications, analytics and reporting, and the administration of multiple scenario analyses or financial modelling, EMEA dealmakers said new technologies would enhance the security around the M&A end-to-end process.
This is a particular concern in the UK, where 54 per cent of dealmakers – the highest percentage across EMEA – say data or cybersecurity concerns are the most common issue uncovered in due diligence that causes the withdrawal from a deal. This compared to 36 per cent of global respondents who said cybersecurity was the most common issue exposed by due diligence.
Merlin Piscitelli, Chief Revenue Officer for Datasite, EMEA, commented, “Using the right technology to manage the M&A process is critical for companies to generate efficiencies and achieve financial targets and revenue growth. The speed at which businesses are able to respond and adapt is critical to their ability to survive and thrive.
“This becomes particularly important, given the risks posed on the global market by the COVID-19 crisis. Having the right tools and processes can mean the difference between M&A success and failure.”
Piscitelli added, “New technologies, such as Artificial Intelligence and machine learning, are making the entire M&A process, not just due diligence, faster and less labour-intensive.
“These new capabilities are valuable in managing all corporate actions, including M&A, initial public offerings and restructurings, which are increasingly taking place due to the market downturn brought on by COVID-19.”