September 23, 2022

DealTech: Metadata Emerges as Key Theme for Dealmakers – Experts

By Rupert Cocke

DealTech covers innovation, new technology and emergent trends in M&A and private equity.

Metadata – data about data – is emerging as a key theme for advisors and executives handling the documentation management side of M&A, two experts said. 

Acquisitive companies are developing an M&A use case for metadata, Andrew Moncrieff, mid-market account executive for M-Files, told Mergermarket.

Metadata is used to describe documents with categories like customer or project name. "This makes documents easier to find, particularly after the person who originally filed it has left the business," Moncrieff said.

Some acquisitive companies have begun deploying metadata systematically to implement inorganic growth strategies, Moncrieff said. He is beginning to promote this approach to the advisory community in the UK and the EU, he said, adding that a disorganized approach to document management can make deals harder to execute. 

Whole lives have been absorbed trying to generate metadata, tech historian Jason Scott said in 2011. “Metadata, you see, is really a love note – it might be to yourself, but in fact it’s a love note to the person after you, or the machine after you, where you’ve saved someone that amount of time to find something by telling them what this thing is.”

The need for metadata is becoming even more crucial as the amount of digital data available has exploded in recent years, experts said. 

An article in Seed Scientific in 2021 estimated that there would be around 44 zettabytes of data available by the beginning of 2022. This was expected to hit 175 zettabyte by 2025. A zettabyte has 21 zeroes. 

The growth rate of nearly 4x is driven by two large macro trends. On the one hand, some 75bn internet of things (IoT) devices are expected to be connected by 2025. On the other hand, nine out of ten people over the age of six are expected to be digitally active by 2030. 

Fast growth in the amount of data available means that metadata is becoming increasingly important for providers and users of virtual data rooms (VDRs), who need to handle large quantities of documentation.

"The organization and management of documents and artifacts is paramount to the success of a deal,” said Doug Cullen, chief product and strategy officer at Datasite. The VDR provider’s Prepare and Diligence applications help dealmakers use a customized artificial intelligence (AI) engine that is trained on 3m deal documents and an M&A vocabulary of more than 400,000 words.

“Typical deals require the analysis of huge amounts of data in a relatively short period of time,” Cullen said. “AI and machine learning (ML)-powered tools that can make the organization of that data as easy as possible benefit all deal teams involved in a transaction.”

Meta-data has also attracted the interest of venture capital (VC) firms. Information management company M-Files, which is based in Finland, raised USD 80m in a round led by Bregal Milestone with the participation of Partech, Tesi and Draper Esprit in January 2021. Some of the proceeds would be used to penetrate the US market, as reported.

On the same day that the round was announced, CEO Antti Nivala told Mergermarket that the company would look at bolt-on acquisitions to supplement its 30%-plus organic growth plan. Since then, the company has bought French software company Hubshare.

On its website, M-Files says its document-management system “enables knowledge workers around the world to instantly find and use the right documents in any context, automate business processes, and enforce information control.” The company operates in more than 100 countries, has more than 500 employees and more than 5,000 customers, as per its website. 

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