Using technology to empower the advice of M&A advisors
May 19, 2022 | Case Study
Mark Chapman, Head of Wholesale Client Ecosystem Group
Nomura is a global financial services group with an integrated network spanning over 30 countries. The firm provides services across retail, asset management, wholesale (global markets and investment banking), and merchant banking.
When it comes to winning a seat at the table in M&A, bankers often say that 90% of the time it comes down to turning up. Client coverage involving the regular calling on clients establishes a regular dialogue to ensure bankers are positioned when a lucrative mandate emerges.
But the challenge lies in ensuring bankers are equipped with the right analytical tools to build a constructive dialogue with clients and ensure they are covering the right clients at the right time.
M&A is the least automated part of the banking process, and therefore potentially holds the greatest potential for technology to transform thinking. “If retail banking is 2% disrupted then the M&A space is 0.1% disrupted and therefore opportunity exists,” says Mark Chapman, head of wholesale client ecosystem group at Nomura. That, along with strong senior management advocacy, was the catalyst for Nomura to engage in an investment bank-wide initiative last year to look at where technology can facilitate the M&A process.
Using new technologies to augment bankers’ skills
The bank is currently rolling out a new customer relationship management (CRM) system providing bankers with intelligence they need to better call on and cover clients, aswell as providing information about potential targets. It will also provide its clients with entry into data rooms which are stored in the cloud.
The focus of the plan is banker-led, as M&A remains a people business. Technology is being used therefore to augment and help its bankers, not retire them. “The approach we’ve taken is not one of automation for automation’s sake,” explains Chapman. “It’s about providing a foundation layer to augment what bankers do.”
In line with this, Nomura has taken a ‘Day in the Life’ approach, a collaboration with more than 100 bankers across the region that looks at every aspect of a M&A banker’s work and maps how they operate. The long-term aim is to create electronic pitch-books that bankers can use as well as price comparison models, which provide the tools to establish relative valuation data for potential acquirers to help them quickly evaluate targets.
Identifying key focus areas with smart analytics
Nomura is also looking at a ‘deep dive’ spanning all of the data and intelligence that the bank holds that is relevant for clients. That data can be harnessed to ensure that bankers are talking to the right clients about the right opportunities.
By pulling together market data and information from bankers’ notes when meeting with a client, the system can arm bankers with reasons to call on particular clients as well as giving a probability score on a client’s likelihood to push ahead with a M&A transaction. Relevant data here could include its capital position and balance sheet strength.
“We’ve come from the starting point of how can we give bankers more time to spend with clients and delivering value-added content,” says Chapman.
M&A is a high-margin business that often serves as a shop window through which banks can sell additional products from financing a deal to currency hedging. Exploring how technology can help M&A bankers’ trusted voice in the boardroom can have a broad impact on a firm’s overall revenue sat a time when banks are under more pressure than ever to boost returns.