Minimising risk and aligning business goals are key for an effective M&A strategy, and due diligence is an increasingly important part of the process. So what should those involved in M&A be looking for in an information source to help them, from identifying targets or acquirers, to the final stages of decision-making?
According to Bureau van Dijk (BvD), experts in private company information and deal data, there are two key factors to consider. “It’s about quality of data and also what you can do with it,” says UK managing director Tony Pringle. “Information should be there to help you make better quality decisions and make them faster – not slow you down in a sea of data.
“Coverage is important, but you should also consider the range of value-added information on offer such as corporate structures and accurate information about what the company does. And you need to be able to manipulate the data quickly so you don’t have to do the leg work – the interface should do that for you.”
Those involved in finding M&A targets, or potential acquirers, generally need to identify which companies are operating in a particular market, create a shortlist and then assess how these companies are performing against their peers. They’ll also need to know whether they’re part of a larger group and how that group is performing. Even researchers interested in UK companies should be looking at a company’s international holdings and subsidiaries as part of the research process.
A good starting point, according to Mr Pringle, is to identify how easy it is to search across an information product. To find potential targets or acquirers quickly and easily, it’s important to have good activity descriptions for companies, and very flexible search criteria with the ability to combine them, so you can identify companies and peers very precisely.
You’ll also need standardised financial data to make it easier to search for companies and compare them against each other. BvD offers standardised financial reports for both global and domestic companies to facilitate cross-border work.
Professionals need to keep on top of their M&A landscape, so it’s vital that an information solution monitors companies and deals for updates
Getting quick access to the financial information on companies involved in specific M&A deals is also useful. BvD, for instance, makes it possible to see a company’s deal history and gives an instant view on similar deals in the same industry, including links to financial reports on the companies involved.
“Professionals need to keep on top of their M&A landscape, so it’s vital that an information solution monitors companies and deals for updates. Information should be pushed to users at the right time – good alerts can make your life a lot easier,” advises Mr Pringle.
“When it comes to due diligence, it’s useful to be able to get easy access to the accounts as originally filed and it’s increasingly important to ascertain who owns the company, and in particular to identify the beneficial owner. Who are the directors and senior management? Are there any likely politically exposed persons involved or any presence on sanction lists that you need to be aware of?
“And it’s not just the subject company you need to consider – you need to know of any risk associated across the group as whole.”
Finally, users need to consider how they are going to analyse this data. “Ideally you should be able to use data from an information solution in your own analysis system or spread sheets, without any data entry. Such products can enrich your view on companies and deals, and significantly enhance your research process,” says Mr Pringle.
“We’re seeing an increasing appetite for our company and deal data because we add value to the data, and users are looking for a more comprehensive view on M&A to help them take a more strategic and informed approach.”
