Digitization in M&A: between hype and reality

As in so many other industries, a heavy digitization wave is raging in the M&A sector. What are its drivers and what impact does it have? This was the topic of the second M&A Forum, during which the Belgian M&A Community exchanged views and experiences.

The M&A Forum took place at the Brussels offices of law firm Loyens & Loeff, with a beautiful view on the city as background. Community manager Daphné Debaenst welcomed the more than 50 guests and observed a mix of familiar and new faces in the audience, a clear sign that more and more M&A professionals find their way to the initiatives.
Robrecht Coppens and Thomas Lenné, partners at Loyens & Loeff, took a few minutes to explain the importance of the topic at hand and why the law firm wanted to host this event.

After this introduction, it was Julien Cayet, Technology & Innovation Director at Loyens & Loeff, who kicked off the content part.
For Cayet, there are several major drivers behind digitalization and the rise of legaltech. The client side that wants to be served as (cost)-efficiently as possible is one of them. On the industry side, many new players are emerging who have mastered this technology, forcing established parties to join in as well. A third driver is that legaltech is now mature enough to create real impact. And, last but not least, there is of course the COVID-19 pandemic that gave home working and hybrid working a huge boost.

Legaltech

The rise of legaltech is also backed up by figures: in 2021, for example, over 9 billion dollars in venture capital flowed into the sector. Still, not all technologies are equally advanced, and clear distinctions need to be made. Things like electronic document management and virtual data rooms are already commonplace, but artificial intelligence or blockchain applications, for example, are still in their infancy, Cayet warned.

The use of tech is also very diverse in the various value chains around M&A. For say funds formation, it does not go much beyond marketing and negotiations on side letters. In M&A, virtual data room and electronic signatures are the new normal. Finally, in portfolio management, things like compliance and reporting workflows have largely been digitized. This shows that digitization is not “one size fits all”.
At the same time, Cayet also pointed out the importance of change management. Encouraging people to use the technology to its fullest extent is at least half his job at the moment, he said.

Panel discussion

After Cayet’s presentation, it was time for a panel discussion with Karl Abelshausen, VP Finance M&A, Integration and Tax at Telenet, Thomas Depuydt, General Partner of Smartfin and Toon Peeters, Partner M&A Transaction Services at Deloitte. All three admitted that they absolutely keep an eye on digitalization, but also that they are not always on the cutting edge in this regard. This is certainly true for Telenet, where mergers and acquisitions are not part of the core business. At Deloitte, the tools are mainly used to facilitate collaboration, set up timelines and help clients with analysis. Much also depends on what stage they are at in the process: for example, how repetitive is the work they are doing?

Irreversible

Julien Cayet – who moderated the debate – argued that there are roughly three angles in terms of technology. An internal angle (how does technology help us do our job), an external angle (how does technology help our customers) and an investment angle (when technology companies themselves become the object of investment).

Regarding the third angle, it was Depuydt who was particularly enthusiastic: “Smartfin actively invests in technology and enjoys working with the founders. The turnaround has also begun and is irreversible”, Depuydt said. “If small firms want to remain competitive and relevant, they must join in with this transformation.”

Afterwards, the guests enjoyed the networking part with some drinks and bites.

See all pictures here.