How Advances In Technology Are Transforming The M&A Landscape

From tech stacks to AI, new approaches are central to negotiations this year.

For a moment, try to consider all of the technological advancements that have radically altered global industries in the past decade. Technology is a core facet of business that is constantly changing, creating new processes and opportunities within virtually every industry, and the field of mergers and acquisitions is no exception. While it may not initially seem like technology could cast such widespread influence on an age-old practice rooted in communication, technology nevertheless plays a vital role in the modern M&A space.

As 2024 unfolds, M&A professionals will need to remain aware of the emerging technologies influencing their industry, especially when it comes to agreements and negotiations. With the rise of programs like generative AI, coupled with the critical importance of data and social media presence, technology will continue to exert an increasingly strong influence over the M&A field.

Digital due diligence

When approaching an M&A negotiation, all involved parties must be aware of the tech implications of the merger or acquisition taking place. Every business or organization has a unique technological makeup that will factor into the ultimate deal, which is why understanding each company’s technology stack is a key component of M&A deals.

To start, M&A negotiators should craft a comprehensive list of all the hardware and software utilized by the business they are acquiring or merging with. Then, they can eliminate any redundancies or absorb systems that may work better for processes or workflow going forward.

A full software audit should also include any proprietary software that keeps the acquired business up and running. Of course, there will be costs associated with maintaining the current technology stack or making changes to better merge systems, but those costs should be factored into the final M&A contract.

Integration of technology

Technology is a significant factor within any M&A deal, but it can also make the entire M&A process easier and more effective. For instance, the emergence of ultra-intuitive AI systems has allowed M&A professionals to use advanced data analytics to predict the course of negotiations and help them better identify potential M&A targets. Predictive AI has been used to determine the soundness of decision-making and analyze every aspect of a business’s operations, from hiring and HR to accounting, financial documents and technology stacks.

Additionally, the increased adoption of remote processes following the Covid-19 pandemic has also influenced the M&A space, since face-to-face interactions are a large component in successful M&A negotiations. Through virtual conferencing technology, M&A professionals have bridged the communication gap—even globally—streamlining the negotiation process by making it more efficient with the ability to share information remotely in real-time.

Cybersecurity in M&A

The aforementioned due diligence process must include an overview analysis of a company’s cybersecurity measures, as cybersecurity has become a much larger consideration with an increase in cybercrime. In 2020, for instance, amidst the upheaval of a global pandemic, malware attacks increased by 358 percent compared to the year prior.

Due to the much more prominent role that cybersecurity plays in modern business, a cybersecurity audit should be part of every M&A due diligence and negotiation, including a comprehensive overview of past breaches, current protections and future plans. A lack of strong cybersecurity measures could negatively impact an M&A deal, and costly fixes may be required to get cybersecurity up to date and make the security structure more robust.

The act of combining systems will also need to be evaluated to pinpoint any potential vulnerabilities or needs that could impact costs or the stability of the merger and/or acquisition.

Looking into the future

Ultimately, integrating any present or future technology should be done with the goal of making the M&A space more efficient, accessible and cost-effective. AI, for example, will continue to greatly influence the space, especially regarding data analysis, predictive analytics and flagging potential issues within a deal. AI and advancing technology can help speed up the M&A negotiation and deal-making process, thereby helping professionals better predict a specific deal’s trajectory and chance of success (as well as its potential challenges) moving forward.

As innovators continue to bring forth ever-evolving tech improvements, the M&A sector will continue to adapt its processes to the tech capabilities. What is known for sure, however, is that technology will continue to exert influence over the M&A space, allowing professionals to be more informed and deals to be reached more efficiently.

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