September 29, 2021

DealTech: M&A Prep Sets Stage for High Volumes in 4Q21 and Beyond – VDR Insight Analysis

By Rupert Cocke with analytics by Jonathan Klonowski

Dealmakers around the world continued to actively prep deals in the third quarter of the year, with an optimistic mood heading into the fourth quarter, according to providers of virtual data rooms (VDRs).

Low interest rates, easy access to capital, and digital transformation projects are key factors behind the soaring volumes being experienced by Datasite, its CEO Rusty Wiley said. This high volume of deals is expected to continue through the end of the year, he said, adding the technology, media, and telecom (TMT) sector has been particularly active, with other hot sectors including industrials and consumer.

Datasite’s CEO Rusty Wiley

How have user volumes progressed over the third quarter across your platform?

Despite some uncertainty and economic disruption and thanks to the rapid acceleration and adoption of digital transformation, M&A continues to thrive. Deal activity has continued to soar in 3Q21, with new global diligence projects on Datasite’s platform up 74% compared to the same period a year ago. Global diligence projects are ahead 43% year-over-year (YoY), January to August this year compared to last year.

This surge in activity is the result of favourable interest rates, ready access to capital, and many organizations turning to technology and combining with other companies to ensure their digital transformation. We are seeing this in the surge of new TMT projects on our platform, which are up 60% YoY, January to August this year. TMT deals are also getting done faster. In the last 12 months, Datasite TMT projects are completing in 30 fewer days compared to deals in other industries. This, no doubt, reflects the increased agility needed in today’s fiercely competitive environment. At the same time, we are also seeing unprecedented levels of due diligence. TMT projects typically have about 10% more pages than other sectors, but our data now shows that they also have around 25% more users than other projects.

Based on this information, can you make any projections for the fourth quarter?

We expect the high volume of deals and the current M&A boom to continue through the end of this year. In addition to TMT, several other sectors, including industrials and consumer, are seeing increased activity. In some instances, new policies or legislation are driving more tie-ups or creating new dynamics. For example, following approval of a USD 1trn US infrastructure bill in August, M&A in traditional infrastructure areas, such as transportation and public works, telecoms, smart grids, and water, is poised to climb, as well as the industrials and manufacturing behind those plays. Some of this activity is already showing up on Datasite’s platform, with new global industrial, transportation and defence projects up 70% in the first eight months of this year, compared to the same period last year. Similarly, M&A activity in the energy sector is getting a boost from global decarbonization policies. This is driving greater investment in renewables and grid modernization, as well as transportation and building electrification.

Have you spotted any interesting trends recently?

The pandemic has changed how dealmakers work and execute deals. They are continuing to use more digital tools to help them collaborate and they are using more advanced technologies, like artificial intelligence and machine learning, to increase their productivity. This adaptation is not going away. Dealmakers are seeing, in real time, that these tools are not only increasing their capacity to manage high volumes of transactions, but they are helping them automate many of the time-consuming parts of M&A management, including marketing assets, preparing for a deal, conducting due diligence, or completing merger integration.

Further research from Datasite

VDR Insight is an initiative from DealTech, a regular feature that covers technology trends aimed at M&A professionals. If you would like to give us any feedback, please contact [email protected]

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