Sustainability, and its many elements, are key themes underpinning M&A transactions in the Nordic region, according to attendees at Datasite’s Dealmakers’ Dialogues in Helsinki last month.

Around 100 corporate executives, lawyers, consultants, and financiers joined Aleksi Airas, Mikael Laine, Salla Tuominen, Juho Puhakainen, Rosie Corcoran, and Elizabeth Pfeuti to discuss the drivers and challenges within M&A in the Nordics, coming off a record year for global transactions and volumes.

M&A on the rise in the Nordics
M&A in the Nordic region outpaced the rest of Europe in 2021, breaking its own records and marking a 44.7% year-on-year increase. Despite the ongoing war in Ukraine, combined with pre-existing economic factors, 347 deals were announced in the Nordics in the first quarter of 2022 – a 15% increase compared to the final quarter of 2021 – showing there is still keen appetite.

Through a series of live polls, the audience agreed with panellists that private equity and venture capital (33%) would drive dealmaking in the next 12 months, with divestitures, carve-outs and exits the next most popular choice (24%). 

Factoring ESG into dealmaking
The role of sustainability – or environmental, social, and corporate governance issues (ESG) – will increase, according to the panelists, who had already seen the climate debate rise up executive agendas in recent years. However, company directors are also seeing other elements potentially impact their plans for mergers and acquisitions, as investors, employees, customers, and regulators demand both transparency and action.

The European Commission’s new rules on corporate sustainability have focused many minds in Finland, the panel agreed. This has led to renewed attention on potential supply chain issues and working with partner companies to bring them along on a sustainability journey.

Rather than being a mere checkbox exercise, sustainability has become a value driver, according to the panelists. The Nordic region is a relative global leader in sustainability. Many companies are now showing how they can factor in ESG elements into their operations and structure. 

Need and reliance on M&A technology
One key challenge the region has begun to overcome is the vast amounts of data and analysis this new component of M&A has introduced. Technology has been key to gathering, amalgamating, and analyzing the wide range of ESG metrics companies need to understand when then they are looking to buy or merge with another business.

This increasing reliance on technology mirrors moves elsewhere across the M&A landscape, where sophisticated online platforms have transformed many laborious processes and created efficiencies across the value chain.

The panels cited digital signatures and better ways to store and manage the large amounts of data required to complete due diligence checks on these deals, along with improved transparency as major advances for the M&A sector.

As volumes have surged, the panel agreed technology has helped to both shorten the time spent on completing deals and avoid human error. The live polls showed the audience agreed, with streamlined deal preparation and the ability to identify risks at early stages – including ESG risk – the most popular answers.