Impact Of Technology On The World Of Corporate Finance

27 January 2024 - Mark Smith

As with all aspects of work and play, tech is having an increasing impact on the world of Corporate Finance. Mark Smith, Corporate Finance Director, explores how the landscape is changing.

If you google hard enough you will be able to value shares, draft Heads of Terms for an acquisition and critically review a Share Purchase Agreement (SPA) someone has presented to you for the sale of your business. So am I concerned that in 5 years’ time I won’t have a job? – Far from it!

Where Tech is helping us and our clients

As an adviser, we subscribe to a number of platforms, including Dealsuite and MarktoMarket, that can provide us with a variety of reports, primarily pulled from Companies House data, Company’s own websites or media reports. These reports will cover amongst other things:

  • Recent transactions within a sector that we can specify. This can give us useful transaction price mechanisms
  • Companies within a sector that are acquisitive. This is useful when we are looking to target companies that we think would be interested in acquiring a client
  • Transaction trends over a period – in summary is it looking like a buyer’s market or a seller’s market (it is rarely bang in the middle)

All this information is useful because it adds to our knowledge bank and means that we can give informed opinions to our clients backed up by third-party evidence. We will share the third party evidence with our clients which will either give them peace of mind over our opinions or can, which we will always welcome, lead to challenge as to the third party evidence we have considered – particularly where our clients business might be considered unusual.

Every transaction will now have a dataroom, usually controlled by the seller’s solicitors. From what I am seeing there is no clear market leader yet in the dataroom world – though in essence they all look to do the same thing. In laymans terms it is where all transaction requests are made and information can be provided in a secure and confidential manner. This can all lead to the speeding up of the transaction process and will normally allow access to different parts of the data room depending on the role and level of access people are given as part of the transaction.

You will note that I state can a couple of times. Ultimately to get a transaction over the line you need a willing and realistic buyer and seller and that’s where the softer skills come in – particularly when we are seeing a change in market conditions, as we have recently seen.

So how do I keep my job?

The nature of a Corporate Finance transaction when it’s an acquisition or a disposal is that 9 times out of 10 – it’s a life-changing moment. As with any life-changing moment, you want someone you trust, who understands what is important to you and the financial impact of any options you might have, guiding you. If it’s life changing decision there will be an element of risk and you are engaged in something you will not have experienced before. Clients want to be able to speak to someone who understands the process, understands the highs and lows, and ultimately is someone you get along with, as you’ll be speaking to them a lot during the process!

Transactions are inevitably about negotiation, you have to understand your client, what’s important to them and what’s less important to them and IT is not going to help me find that out.

It’s the negotiations where IT and the softer skill combine to get deals over the line. I can talk to my client about transaction price ranges, what’s current in other deals and where we might need to concede on some points. What IT enables me to do is back up my thoughts with evidence.

The skill is sifting through the available evidence and considering what the most appropriate evidence is. Without that skill set, you are just awash with data.

Wrap up

So am I wary of the impact of Tech in the world of Corporate Finance?

To a degree yes – because it takes skill to interpret the information available. Do we embrace it – yes – because it saves time and enables us to better focus our efforts on negotiations and getting the best possible outcome for our clients.

If you are looking to make a change to your business, whether that’s by making an acquisition or considering possible exit strategies get in touch with Mark Smith to discuss your options by calling 0330 058 6559 or emailing hello@scruttonbland.co.uk

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