by Rupert Cocke, Journalist, Mergermarket
M&A practitioners need to think hard about how their own industry will change in the years ahead. Mergermarket’s Rupert Cocke explores the new landscape.
Investment bankers and corporate lawyers are used to lecturing executives on how technology will transform their industries and how they should react. And the smartest ones are realising that the world of M&A is poised on the brink of its own transformation.
If a corporate lawyer stepped through a time portal to visit a 21st century law firm, he would see a lot of superficial changes, said one London-based M&A lawyer. However, once our time traveller got past the computers and smartphones, he would see that the core of the business remained basically the same, he added. In another 20 years, that might not necessarily be the case.
One of the most significant changes will be the entry of artificial intelligence (AI), which is beginning to eliminate grunt work formerly undertaken by junior practitioners. In the longer term, being able to recognise non-obvious patterns is likely to lead to new ways of doing business, Merrill Corp Chief Product Officer Thomas Fredell said.
AI tools are at the heart of legaltech, which law firms are beginning to use to automate work involving lots of large documents. It is a dynamic world, with lots of start-ups and little standardisation. Everlaw, a cloud-based platform, has been calling for industry-wide security standards on how confidential data is stored, according to company founder and CEO AJ Shankar.
Due diligence – a pre-deal investigation of likely issues – is one area that is likely to face considerable change. Merrill Corp regularly incorporates new AI tools into its virtual dataroom, DatasiteOne, such as tools that let administrators block sensitive text for certain users, Fredell said.
Meanwhile, cyber-security due diligence should become more common following a large fine over data breaches at British Airways, said Andrew Beckett, managing director and EMEA leader for Kroll’s Cyber Risk Practice at its London office. A handful of private equity (PE) firms have adapted the practice as standard already, but it is far from common outside North America and the UK, he added.
Other areas which could change the lives of M&A practitioners include private social networks where they can safely discuss confidential information with other deal insiders, registered communications and even military-grade smartphones.
While it is unclear how fast the new tech will be adapted, it is clear that M&A is no exception to entrepreneur and investor Marc Andreessen’s prediction in 2011 that software would eat the world.
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