M&A Automation: The move from transaction to innovation platforms.
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This is an interview with Dr. Karl Michael Popp.
Interviewer: Digitalization is reaching the M&A advisory industry and promises efficiency gains and competitive advantages. How would you assess the current level of digitalization in the M&A consulting industry overall?
Popp: Digitalization is low and concentrated on individual parts of tasks. There are isolated so-called “automation islands”, but no M&A process that I know of is fully automated. There are data management tools that could be expanded with additional functionality. This goes in the direction of process control, analytics, artificial intelligence and feature extraction. On the other hand, there are process management tools for M&A activities, such as Midaxo or other platforms.
Interviewer: At what point do you currently see the progress and market maturity of digital tools or even holistic platforms for M&A processes?
Popp: That depends very much on the tool in question and the task. We are very advanced in the area of data rooms. In other areas, we are still at the beginning. The development here is very dynamic. Feature extraction is particularly interesting. Here, contracts can be analyzed automatically with the help of artificial intelligence and optical character recognition.
Interviewer: To your knowledge, are there any holistic platforms that could support the M&A process or is this all still at the development stage?
Popp: The terms “transaction platform” and “innovation platform” are important here. Today, there are data rooms and M&A process management tools that allow me to manage a transaction; these would be transaction platforms. Innovation platforms, on the other hand, would have the advantage that a wide variety of automation islands could be brought together on one platform with the help of a standardized API. The idea would therefore be to bring together a data room and a process control tool and set it up in such a way that many different tasks can be incorporated using a wide variety of tools.
Interviewer: The hypothesis is often put forward that M&A consulting cannot be standardized and cannot be made more efficient with digital solutions. What is your opinion on this?
Popp: My opinion on this is relatively simple, because I believe that the hypothesis can be easily refuted. There are many examples in the subject area, i.e. companies per se, the associated analyses, evaluations and project management, that all of this can be further automated and standardized. I believe that a lot can be automated and standardized without any gaps.
Interviewer: Why do you believe that digital solutions and platforms will become permanently established in transaction consulting?
Popp: In my view, there is exactly one reason and that is the issue of competition. In the M&A sector, there will always be pressure to further automate things and make them more efficient. At SAP, I can see that many areas are using modern analytical applications, machine learning applications or a combination of the two to process more complex issues than M&A activities in some cases. So I'm not worried that further automation will also come to M&A activities in the future.
Interviewer: In your opinion, will digital platforms or ecosystems, which could be used to handle the transaction process, replace the traditional approach?
Popp: I do not assume that there will be fully automated processes in the next five years. They don't exist in most other areas today either. Partial automation will be possible, but complete automation will not be possible for such a complex activity.
Interviewer: To what extent could individual phases of an M&A process be handled or supported by digital solutions?
Popp: I think that we have the necessary information available in digital form at many of these points. However, the creation of these documents is unfortunately only rudimentarily automated. Interviewer: How would you describe the “digital M&A process of the future”?
Popp: My idea is that there will be process control platforms that integrate all automation islands via a standardized API. All tasks would then run via one platform.
Interviewer: What recommendations would you give the M&A sector, especially M&A consulting firms, in order to remain competitive in the future and to achieve time, quality and efficiency gains within the processes?
Popp: Increase the level of automation and data integration with the respective companies in order to achieve the proposed efficiencies.
I hope you liked this extreme automation example. This example was presented in conjunction with my new book “Automation of Mergers and Acquisitions“.
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