What does the M&A process look like for practitioners today and in the future, and how much of it can and should be automated and in what areas? These are some of the key questions we asked 860 EMEA-based M&A practitioners from corporates, private equity firms, investments banks, law and professional services firms for their views on the subject.
The EMEA responses, which formed part of a global survey of 2,235 practitioners, reveal many similar perspectives with other regions, as well some interesting differences, too.
Where the differences lie
While most practitioners in EMEA, the Americas, and APAC expect the digital maturity and technological sophistication of the M&A process at their company and industry-wide to rise to a high level in five years’ time from a medium level today, some regions are already more advanced than others. Notably fewer practitioners in EMEA, for example, currently assess a high level of maturity and sophistication compared to their peers, perhaps indicating that EMEA processes industry-wide lag the other two regions.
What’s holding EMEA back? There are several factors, but for most EMEA practitioners the top three main barriers to adopting new M&A process-related digital technologies are: financial or investment constraints; data security and privacy issues; and integration challenges with existing systems and tools.
However, the view varies across EMEA, where, for example, company culture seems to be a bigger barrier to practitioners at companies in the UK, France, and central and eastern Europe than elsewhere.
Technology: hope is on the horizon
Differences in view are to be expected, but one key area EMEA practitioners agree on is that due diligence is the most time-consuming stage and could be enhanced most by new technologies and digitization.
New technologies will not only help accelerate due diligence over the next five years, but they are also expected to enhance the security around end-to-end process, data management, and communications, improve analytics and reporting, and help practitioners run multiple scenario analyses or financial modelling.
To help them, EMEA practitioners are placing greatest hope in AI and machine learning technologies, especially as part of virtual data rooms, to deliver this process enhancement and digital upgrade. In recent years, significant technological advances in the M&A and due diligence process have occurred. Yet by 2025, new technologies, perhaps built into the next generation of virtual data rooms, could potentially see the M&A and due diligence process transformed.
Accelerating due diligence
On the speed of due diligence, most EMEA practitioners assess the process as taking less than three months, which is similar to the speed in the Americas but notably quicker than in APAC. EMEA and Americas practitioners similarly anticipate due diligence to accelerate to one month or less by 2025. By comparison, most APAC practitioners expect the process to only accelerate to one to three months in five years’ time.
In terms of what will help accelerate due diligence, most practitioners in EMEA believe the ability to access and use a virtual data room with AI and machine learning technologies could help speed up the process the most. Most Americas practitioners say the same, but APAC practitioners take a different view, believing standardizing documents and processes could be the primary catalyst.
What’s more, notably more EMEA practitioners than their peers believe new technologies should enable greater analytical capability in the due diligence process in five years’ time. However, notably more practitioners in the Americas and APAC than EMEA believe technology should, by 2025, enable greater security and simplify the entire M&A process.
To learn more about how practitioners see M&A changing, the role technology will play in the future, and views from different regions, visit The New State of M&A Hub.