By Rusty Wiley, CEO of Datasite
What a difference a year makes – especially the past. Global dealmaking has taken place in the past three months alone increasedThe deal value sets a new record for the highest sum in the first quarter. Deal for the first quarter volume In remarkable contrast to the first quarter of last year, which saw mergers and acquisitions (M&A) nearly stalled as dealmakers and corporations absorbed the impact of lockdowns on both the global and regional economies.
A confluence of factors including cheap interest rates, the widespread availability of safe vaccines, and access to capital – partly in the US through the Biden administration $ 1.9 trillion Covid auxiliary bill – have led to improved investment conditions. This is reflected firsthand in the influx of new projects we see at Datasite, which enable nearly 10,000 deals annually. Currently, new projects in the current fiscal year, which are more start-up deals than announcements, are up 60% year over year in the US.
Dealmakers expand their options
This increased activity, in turn, translates into higher valuations and a more competitive environment for businesses and dealmakers everywhere. In response, some dealmakers are expanding their options to include corporate venture capital, partnerships, and minority stakes. One recently survey Of more than 590 dealmakers, including 225 from North America, found that more than 40% of M&A professionals are working on one or more less traditional transactions such as a partnership or a reorganization.
Dealmakers are also turning to SPACs (Special Purpose Acquisition Companies) and PIPEs (Private Investments in Public Equities), the final stage of fundraising in the blank check lifecycle. Last year, SPACs raised over $ 75 billionalmost twice as much as in the last ten years combined; and more recently taken into account 17% of the global transaction value in the first quarter of 2021. The faster deadlines, lower price risk and the ability to work with experienced management teams make SPACs a viable exit option.
While the volume is almost entirely in North America, there are signs that SPACs are going global. Only three SPAC contracts were signed in Europe last year, but that is expected to change in the course of 2021. Results from a global survey More than 180 global finance, accounting and business development professionals have determined that Europe will see the biggest boom in alternative listings like SPACs in the next 12 months. In addition, a growing number of Asian sponsors support US-listed SPACs as well as Hong Kong and Singapore Iron out the rules to activate SPAC listings on their own exchanges.
Technology is the key to successful results
Regardless of what transactional dealmakers are working on, the key seems to be using technology to optimize the bottom line. For example, SPACs do the Buy-side environment more difficult because they increase the way in which good goals can exit, making it harder for buyers to achieve those goals. Buy-side dealmakers can accelerate the M&A process and business monitoring by using technologies such as: These include specially designed tools that buyers can use to track and manage their deals, as well as tools that dealmakers can use to lead their teams remotely Painful spots for many companies.
At the other end of the spectrum, sell-side dealmakers can also use technology to optimize valuations. Tools that can speed up the M&A process, including providing the right information to a potential buyer or even preparing documents quickly, can affect the outcome. Currently, due diligence is taking longer in some cases as sellers struggle to determine whether EBITDA, when measured without adjusting the financial impact of COVID-19, is an accurate representation of company value. The sales side needs to understand how and when to compress their schedules and use technology to keep them on top so they’re ready for business.
Q2 2021 and beyond
The global spread of COVID-19 vaccines and the better macroeconomic outlook certainly sparked dealmaker optimism in the first quarter. This trend is expected to continue as new government initiatives such as B. massive, numerous transactions were made on the Datasite platform US infrastructure plan. With greater market security, the confidence of companies and dealers returns. As the year progresses, dealmakers need to make sure they have the right tools to take advantage of the moment.
The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.