May 19, 2022 | Case Study
Rothschild & Co is one of the world’s leading and largest independent financial advisory groups. A family-controlled group, it provides M&A, strategy and financing advice, as well as investment and wealth management solutions.
While investment banks have in the past used their global network of offices and bankers as a selling point in scouring the globe for M&A opportunities, technology is transforming the speed and scope of that process.
Warner Mandel, global co-head of the technology, media and telecoms practice at Rothschild, which is Europe’s leading advisor by number of deals, says that a good example is investment banks’ use of big data, which he says essentially makes it possible for advisors to identify targets worldwide “from a desktop”.
As banks have access to the same or very similar data sets, Mandel says this has commoditized the target identification process. Acquirers, however, stand to benefit, not least because through this they are presented with opportunities from deep dive data analysis which they may never have seen otherwise.
Doing more, digging deeper
In the same way, once formal due diligence begins, acquirers can access an unprecedented level of detail about the target and the industry it operates in, pooling a wide range of comparative industry data in order to help price negotiations. What’s more, the use of data analytics on the advisor side frees up junior staff from repetitive, low value tasks to focus on more analytical, high-value work such as modelling and valuation.
“Technology allows you to do more in the same amount of time,” says Mandel. “The increased use of technology in M&A has distilled the client relationship. Now corporate clients can expect in-depth data analysis as a matter of course and are not willing to pay for it.”
While the advance of technology is benefiting acquirers, there can be downsides too. The proliferation of data analysis in the due diligence process can, for instance, create information overload and protract the sales process. “In the past bankers would make a call with imperfect information,” says Mandel. “Now there is a tendency to continue the research, to dig deeper and that can lead to paralysis by analysis.”
Quality and experience prevail
Delays can be costly. So can bad advice, which is why corporate clients are willing to pay more for the best. “With improved analytics now the norm,” says Mandel, “clients pay for more value-added services like judgement and trusted advice.”
The true mark of quality advice is in advising a client not to do a deal that does not make strategic sense. “M&A is a people business and no amount of due diligence will dissuade a CEO from doing a bad deal,” says Mandel. “That’s where experience and strong, trusted personal relationships come in.”
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