Deal-Ready: Companies Prepare for Opportunities, as M&A Activity Picks Up in Q4


M&A activity surged in the third quarter, and more momentum is expected in the fourth quarter. Datasite recently surveyed 600-plus dealmakers to find out what’s driving dealmaking. Mergers & Acquisitions asked Datasite CEO Rusty Wiley (pictured) to share the results of the survey and his perspective on end-of-the-year dealmaking.

What does the recent uptick in M&A activity mean for Q4?
We started to see activity on our platform, which facilitates almost 10,000 deals annually, pick up in June, especially from strategic buyers and the middle market. This continued over the summer with the number of new projects up year-over year 11% in July and 19% in August. We recently surveyed over 600 dealmakers across the Americas, Europe, the Middle East, Africa (EMEA), and APAC, and found that increased consumer confidence and restructurings are the key drivers of the M&A market recovery. Of course, the type of activity and industry varies from region to region, but if conditions continue to improve and middle-market companies continue to pursue restructurings and divestments, we expect to see strong deal volumes for the remainder of 2020.

Are dealmakers rushing to close deals before the election, with the potential for regulatory changes in a new administration?
Given the upcoming presidential election and the possibility of changed priorities, the potential for near-term domestic M&A is significant. This explains why we are seeing more and more companies preparing now so they are ‘deal-ready’ for any opportunity. Being ‘deal-ready’ ensures that, even if diligence timeframes are compressed, projects can proceed at an accelerated pace and the likelihood for successful deal completion remains high.

Can dealmakers expect more increased activity to close out 2020?
Both buyers and sellers are being more selective in terms of acquisitions and divestments because of price uncertainty and a less-than-clear economic outlook. Additionally, in some instances, the process of completing M&A is being prolonged by an increased scope of due diligence. The number of pages on our platform increased significantly in July and August and, overall, the number of pages on our platform this year is up 7% compared to last year, a sign that more information is being stored in our data rooms to meet increased diligence demands. That said, we are also seeing conditions continue to improve so we do expect strong deal volumes for the remainder of 2020.

How is the increased use of technology in the pandemic affecting transactions?
COVID-19 has disrupted the global economy and brought many businesses to their financial brink. Some companies have already filed for bankruptcy, while others are exploring strategies to address their sustainability through restructuring or financial repositioning. In each of these cases, virtual collaboration from anywhere, at any time, becomes even more important in reducing delays in activities and communication. With a large majority of dealmakers still working from home, being able to access advanced technology tools means work can continue without delays.

What does all this mean for the future of M&A following the COVID-19 pandemic?
Throughout the global pandemic, companies and their advisers have been increasingly using remote and virtual technologies to conduct their negotiations, market their assets, prepare for a sale and conduct due diligence, sometimes even with drones. Additionally, new technologies such as artificial intelligence (AI), are speeding up the transaction process by automating several time-consuming tasks associated with it. For example, AI and machine learning are streamlining the process forpreparing a deal, making it possible to upload thousands of files whilecategorizing and placing them into foldersin a matter of minutes, not weeks.

For more on the M&A rebound, see: