December 20, 2018

New York Groundview: Donald's state of mind

Abby Roberts | December 20, 2018

Donald Davis runs the Northeast advisory team. He lives in New York City with his wife and is an avid golfer.

Q. What local market trends are you seeing?

There’s obviously been some uncertainty with the public markets, but we see good traction in the private equity space. Smaller and mid-market deal-making remains strong, and we expect the recent spate of large corporate breakups to generate activity throughout the next year.

New York City is the epicenter of M&A in the states, but there’s also a lot of activity coming out of Boston. It’s hard to tell though how much of that is the local market and how much is our expanding market share.

From a sector perspective, healthcare remains robust, and industrials bankers are having a hay day. Industrial groups are very much volume driven, and there are seemingly a million companies for sale out there.

Consolidation and moderately low borrowing costs are driving health and wellness deals. On the health side, you’ve got a bunch of businesses going for that organic look or feel – from lip balms to personal products – in play. There are also a fair number of fitness companies trying to acquire and integrate technology or media products, rather than spend the R&D money to build internally.  

Q. Any new due diligence trends?

Speed is a big one. Clients are pushing to get their deals done sooner. I’m seeing fewer standard six-month contracts and more one, two or three-month terms. When I started in this business, I never saw three-month contracts.

Some clients can wrap-up in three months. Usually, to finish in three months, they already have a buyer identified, however. Mostly it’s going to take longer.

Another interesting trend we’ve seen in the past couple of months is more reverse mergers and merger of equals. In those deals, clients will open two DatasiteOne sites at once, so the buyer and seller can conduct due diligence simultaneously. We expect more transactions like that going forward, as diligence requirements become more stringent and sellers increasingly opt to conduct diligence on their potential buyer to ensure it’s a good fit.

When conducting simultaneous diligence, it makes sense to choose the same due diligence platform so everything is streamlined. On DatasiteOne, clients can invite each other to the Q&A, access information from both sides of the deal, and generally stay on the same page from a permissions and reporting functionality standpoint.

Q. I thought just Europeans liked to use our Q&A feature?

Historically, that’s true, except for one-on-one negotiations. But lately, we’ve received feedback that clients like the Q&A feature and are starting to adopt it. Many are tired of going back and forth with email, excel and DatasiteOne, and want to make the process more efficient.

It’s a security issue too. It’s a bit counter-productive to take all the information from a secure platform, summarize it and send it out insecurely via email or file share. A couple of banking groups have recently said, let’s consolidate processes onto DatasiteOne and do away with the tracker.

Q. What is the DatasiteOne difference?

The speed of upload, ease of use and modernization of the software. This is a new, fresh product that works. And works well. 

We’re also the only provider who doesn’t outsource any piece of the product, including customer support. Everyone who works on the deal is a Merrill employee; they’ve gone through the same background checks and signed the same NDAs as me. That gives clients a lot of comfort.

Finally, we have a terrific sales team. When you need a project launched first thing Monday morning, who takes that call at 9 pm on a Sunday? We do.

Ready to Get Started?

You may also like:

The Carrot and Stick of America’s Inflation Reduction Legislation

The impact of the Inflation Reduction Act (IRA) on M&A and dealmaking in the United States.

City Skyline
Expert Spotlight: Women in Dealmaking – Up for the Challenge

Our expert panelists at a recent women-only event in London share their thoughts on the challenges women in dealmaking face, the changes taking place in the sector, and advice for the next generation of women in M&A.

Market Spotlight: Spotting new members of Asia’s ‘unicorn’ club

ZDNet reported that the number of APAC unicorns grew more than 25% in 2021 when the region attracted US$193bn in private investments, almost a third of the total global value based on numbers from a recent study by KPMG and HSBC. Learn more about APAC's unicorns in this market spotlight blog.

M & A Professionals discussing a Data Room