This year has seen a host of issues impacting M&A around the world: ongoing wars in Ukraine and the Middle East, high energy costs, rising inflation, and elections with conservative tendencies gaining strength. However, interest rates are being cut and a strong US dollar could provide a tailwind for M&A and PE deals. What does this mean for dealmakers in Switzerland and the surrounding region? Christian Hemmrich, Gaël Jacquemettaz, Markus Schiller, and Barbara Stamm recently discussed these issues with Patrick Dewayne in Zurich to find out what lies ahead for M&A there.

The State of M&A

Swiss M&A deal volume in Q3 was flat compared to last year, with 88 deals, matching Q3 2023’s total. However, aggregate deal value experienced a significant boost, accruing €5.7bn, triple the equivalent period in 2023, albeit from a three-year low.

So, the good news is that while the number of M&A deals is holding stable, the volume is also increasing. Exits also appear to be reemerging and, on the buy-side, there seems to be a good pipeline of investors.

Moreover, per anonymized data from Datasite’s platform, the diligence time across the market is around 170 days, calculated from the time the deals come onto the platform – taking less time in Switzerland than a year ago. However, the rate of successfully completed deals is expected to remain below 50 per cent.

What is causing deals to not complete? Financing is not the issue, but rather different expectations in terms of price or valuation, especially for ‘average’ assets. And investors are now more likely than in the past to demand that companies do their homework and, for example, clean up their product range before pursuing a deal.

Optimizing M&A Dealmaking with Technology

Clearly, getting deals done is important. The fact that the amount of available documents and information is much greater than before can lead to more transparency and better decisions, but can also make the decision-making process more complex. Advanced technologies, such as virtual data rooms and AI, have the potential to help, especially when it comes to creating efficiencies.

For instance, AI technologies can quickly search through thousands of files for important information and perform repetitive tasks such redaction. And platforms like Datasite can be used as an early warning system that helps to identify potential problems before the due diligence process even begins.

However, technology and AI are still nascent and there remains potential for increasing efficiency along the entire M&A process chain. For example, in deal sourcing where potential targets are still searched for manually in databases, AI could be extremely helpful with the processing of NDAs, which need to be carefully checked and adapted for each situation.

Nevertheless, we still need humans to interpret data correctly and make decisions. Good judgment and experience cannot be underestimated and will likely never be replaced.

To learn more about how Datasite can help you with your next deal, click here.