The Evolution of M&A: From Traditional Models to Digital Transformations

Mergers and acquisitions have long been a business strategy for pivotal growth and expansion. While the primary objectives stay the same, thanks to technological and digital advancements, the processes themselves are evolving. Here, we'll examine five changes we expect to see in the new mergers and acquisitions era being ushered in by digital transformations.

1. Digital Deal Rooms

Historically, mergers and acquisitions transactions meant lengthy in-person negotiations and meetings. Thanks to the rise of virtual communication, there will be less reliance on in-person meetings. Geographic barriers that once may have dictated or limited your mergers and acquisitions strategies no longer pose issues.

Virtual environments make it easy to:

• Streamline communication
• Facilitate collaboration between multiple stakeholders
• Improve transparency throughout the deal-making process
• Expedite due diligence

All of which can help successfully close a deal.

2. Reduced Reliance on Physical Documents

Because of this rise in virtual deal rooms, we can also expect less reliance on physical paperwork and documentation. With a secure, centralized platform, all parties can quickly and easily exchange sensitive information and required documentation.

That also means the need for file storage solutions will be eliminated, as files can be securely stored on servers and retrieved immediately.

3. More Streamlined, Efficient Due Diligence

Due diligence is a critical phase of the mergers and acquisitions process. Up until now, it has traditionally involved extensive, manual review of legal documents, operational records, and financial statements. With help from artificial intelligence and machine learning algorithms, companies can streamline the due diligence process. These technologies allow vast amounts of data to be quickly yet thoroughly analyzed. It's important to note that technology should never replace human oversight.

When used with your team, technology can be an effective way to quickly identify potential risks or uncover valuable insights that warrant more attention from your team.

4. Increased Focus on Digital Assets

Now more than ever, the integration of digital assets will become increasingly prominent in mergers and acquisitions transactions. There's a greater emphasis on acquiring:

• Digital capabilities
• Intellectual property
• New technologies

Whether in the form of a digital platform that helps a company expand market reach or a focus on acquiring software startups for their innovative technologies, digital assets will play a pivotal role in mergers and acquisitions strategies.

This new focus will create a unique challenge: how to value or account for the intangible assets inherent in this digital world. It will become crucial for companies to adapt their financial metrics and overall methodologies to account for these changes.

5. More Cybersecurity Concerns

While these changes have positive impacts, they also raise cybersecurity concerns. Companies will need robust systems to ensure sensitive information is safeguarded, especially during virtual transactions; a cyber threat or data breach could jeopardize a deal. Monitoring, adapting, and updating cybersecurity programs and protocols will be vital.

Navigate This New Era With True North Mergers & Acquisitions

Those who understand and embrace how traditional mergers and acquisitions models evolve will gain a competitive advantage in our increasingly digital world. Connect with our COO and Managing Director Erica Gilson to learn more about this evolution and how True North Mergers & Acquisitions can help achieve your financial goals.