Some industries are changing their work model from virtual to hybrid, which involves face-to-face hours in offices and others virtually. This has had a positive impact on M&A transactions as they continue to increase in volume and amounts.
As of July 2021, based on what Rión reports, 36 operations were registered in Mexico which, compared to the same month of the previous year, represents a growth of 100%. Regarding the amount, it increased from USD 101.0 million in July 2020 to USD 1,109.3 million registered in July of this year.
This rise reflects the confidence of investors in the country, but how do they support each other to monitor their pipeline acquisitions in this new normal?
The negotiation factor and the power to generate trust face to face is a vital element in a transaction; however, during the entire M&A process there are steps that are reinforced with the use of technology.
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To produce pipeline, are supported by reviewing the targets based on public information available such as financial reports, stock market evaluations, industry analysis comparisons, comments from collaborators and former collaborators, etc.
In the same way, there are specialized platforms in consolidating information on companies, key people in organizations and relevant news of possible targets, which allow them to evaluate targets and help to refine them based on a first study and focus on companies that are strategically of interest.
At due diligence The collection of information is usually shared through a virtual information repository (data room), which is very helpful, since the folders are cataloged, for example: legal, fiscal, financial, security, human resources, etc. This is shared once both parties involved have signed a letter of intent, which allows an additional report to be given to the public or based on specific requirements of the potential buyer.
The foregoing is essential to learn more about the corporation and determine if the target has the buyer’s requirements to continue to the next stages. Bringing artificial intelligence to the due diligence We benefit from implementing this type of tools that allow a faster review and preliminary selection of words that are priority for the review of the consultants or the same firm that is conducting the analysis.
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For the closing of the transaction it is important to have a deeper or specialized investigation that helps us to have a better benchmark and thus be able to establish the areas of opportunity and improvement in the new organization, whether it is to integrate, maintain as stand alone, etc., as well as roadmaps to identify where we are in the process and what are the priorities in each of the steps and areas that we are evaluating.
In general, we believe that bringing technology into the M&A process helps us analyze large amounts of documents; However, there is always the risk of interpretation so, although they help to select or pre-select the information, the analysis of internal and external advisors cannot be excluded or limited to have a good evaluation of the target and the different steps in the operation.
We want to leave a series of looks at the future of transactions and technology. Not so many years ago the review was documentary and physical, we moved to the famous data-room, and now we are using artificial intelligence to filter certain information, what will become of the process of due diligence and the target screening in the combination of artificial intelligence and the assertive use of mega data? How will this streamline an M&A process and make it more successful? How will predictive data impact the type of transactions and their effectiveness? At what point in M&A history will we have supercomputers suggesting targets in the morning and closing deals at the end of the week? Where is human capital and climate change in this equation? We will continue to explore these topics in the coming months.
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* Ale Fayad is Mercer’s Principal M&A.
*Sofia Cruz, M&A Transactions, Multinational Client Group
Mail: [email protected]
Mail: [email protected]
The opinions expressed are solely the responsibility of their authors and are completely independent of the position and editorial line of Forbes Mexico.