Technology-driven data analytics is transforming the M&A process for private equity (PE) firms. Insights gained from data can help firms to identify targets, confirm assessments of financial conditions and predict business trends. But it can also provide a window into potential acquisition targets and assist in the execution, speed and integration of deals.
Transaction analytics — data analytics used in transactions — uses company, target and third-party data, along with statistical algorithms and quantitative analysis, to drive better insight and quicker decision-making for mergers, acquisitions and divestitures. From a due diligence perspective, analytics can help potential buyers to identify issues more quickly and to focus the due diligence process, and it can help buyers and sellers close a deal faster.
“Transaction analytics is transforming the deal process by making it a data-driven process from conception to completion,” explains Malinda Gentry, US Transaction Analytics Practice Leader, Ernst & Young LLP.
An accelerating market
Jeff Liu, EY Global Technology Industry Leader, Strategy and Transactions, argues that digital technology will continue to drive much M&A activity. "Digital disruption is not standing still for global economic uncertainty, and neither is global technology M&A.”
“Big data analytics is a perfect example as tech and non-tech companies alike seek new data sources to feed their analytics capabilities, especially where machine learning technologies are involved,” he says. “We expect the waves of M&A and new partnering trends to continue."