February 13, 2020

Local Spotlight: M&A Innovation in Africa

By Suzy Bibko, EMEA Content Marketing Manager, Merrill Corporation

At our African M&A Innovation Breakfast in January 2020, we asked local M&A practitioners about the state of M&A there. Interestingly and despite a predicted dip in South Africa’s M&A market in 2020, practitioners in the region remain optimistic and ready for technology to transform the M&A process to help them secure success.

A Positive Outlook
We asked local practitioners about the outlook for M&A in the region and, surprisingly and despite the prolonged period of political and economic uncertainty in South Africa - the continent's most important financial center (ex Noth Africa/Morocco), half of the practitioners we surveyed said they had a positive outlook for the region.

Due Diligence a Driving Force
This optimistic attitude also seems to encompass how they view technology and innovation in the M&A sector. As due diligence is viewed as the most important success factor in M&A in the region, it comes as no surprise that this is where they believe technology can help them the most.

Data Analytics and AI: Truly Transformational
But which technologies? By far, the practitioners believe that data analytics, AI and machine learning would have the most transformative impact on M&A going forward. “Lack of sufficient analytics tools during the due diligence stage results in more time reviewing information from various sources with a view to interpret findings and make investment decisions,” explains Mamokete Ramathe, Founder and CEO, Mamor Capital and panellist at our event. And her thoughts on the use of AI and machine learning in the due diligence phase of the M&A process: “Truly transformational.”

Unseasoned, but Savvy
This is great news, especially as practitioners in the region do not view their organizations as digitally mature and technologically sophisticated. While they might not yet be using the technology available, they understand the value it brings to doing deals.

“We can leverage the use of technology to enhance analytical capability and improve the quality of output – to map the competitive landscape by gathering relevant data from various sources and generate insights and criteria for selecting companies with similar profiles and characteristics,” explains Ramathe. “Artificial Intelligence and data analytics can be adopted and added to a system’s functionality.”

DatasiteOne Diligence Answers the Demand
“Merrill DatasiteOne Diligence is at the forefront of innovation and technology for M&A, and the pioneer when it comes to AI enhancing the M&A process,” says Tad Zindi, Director, Sub-Saharan Africa at Merrill DatasiteOne. “We are the only M&A software provider that offers AI-powered tools like M&A redaction. And our analytics tools allow dealmakers to analyze critical deal insights and pick KPIs to create powerful insight, filter and drill deep into data at the user, folder and document level and create report-friendly outputs. Our tools all help M&A practitioners secure success better, faster and more securely – and are all things the African M&A market demands.”

This will take on event greater important once South Africa’s Protection of Personal Information Act (POPI) comes into full effect, as the penalties for non-compliance are high: fines of up to up to R10 million and jail sentences of up to 10 years, depending on the severity of the breach. “Choosing a compliant due diligence application is imperative to minimizing risks, and DatasiteOne Diligence is the trusted provider,” emphasises Zindi.

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