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There’s no doubt that the Australian M&A market is hot, and the busiest we’ve seen for a few years. In industry terms, there is a ‘record level of dry powder’ held by private equity firms (PE). “As recently as 2020, Prequin and the Australian Investment Council Yearbook estimate there is more than $13 billion in ‘dry powder’ in Australian private equity and venture capital funds,” says Aaron Black, Partner and Head of Private Equity in Australia. Low interest rates and the potential to make attractive returns have the sector humming, and everyone’s paying attention.
To mark World Creativity and Innovation Day, we sat down with some M&A team members to ask what they’re seeing and hearing in the market, and why Deloitte is well positioned to make a big impact. Specifically, we look at our approach to embracing innovation and technology to save time, and help drive value for clients.
“If you asked me in a short elevator ride how I think Deloitte is different, I’d say two things,” says Kurt Heppner, Partner and leader of M&A Analytics offerings. “Firstly, we bring all of the firm into our M&A transactions to support deals in an end-to-end process across the M&A lifecycle (some 40 different activities across the firm). Secondly, we take a truly innovative, technology-driven approach in identifying and validating exciting investment opportunities for PE funds.”
“Funds are looking to develop well-considered investment ideas, and work collaboratively with their advisors to originate new deals,” says Damian Nikolic, M&A Director. “And we’ve designed a unique digital platform to make that happen. DealiD helps our clients – in this case assisting PE funds with their investment in private companies – by identifying the right deal faster and better. It is about helping our clients to continually search for new investment opportunities and develop their deal pipeline.”
The team behind DealiD – Better, quicker, faster!
When asked why they work in M&A, the response is unanimous – it’s a dynamic industry. The huge range in clients with diverse preferences and needs. Working across many sectors and industries. And most importantly, no day is the same.
“You get a very broad understanding of clients and industries – and although the M&A process is similar, every deal is unique,” says Damian. “I also enjoy the variety of working with a great team to find the best way to deliver the best outcomes to our clients.”
“Depending on what your clients’ priorities are, you are able to work with unique data sets, which makes it really interesting….,” says Khushbu Varma, Manager. “I love tough challenges, like being asked to quickly find every private company within a niche industry, or figuring out which alternative data sets you can combine together, synthesise, and utilise to inform concise recommendations. That sense of collaboration, to create something that previously didn’t exist, is great. There’s nothing like sharing a vetted list of takeover targets at speed.”
“I love the pace too,” says Kurt. “Whether it’s turning around analysis and insights in a few days rather than weeks, or getting a call late one night, and being part of the deal team that lodges a successful bid in market a few weeks later. It’s an adrenalin-fuelled experience!”
So, what exactly is DealiD?
In a nutshell, it’s a tech-enabled innovative solution that has digitised the target search process and has been entirely built by the Deloitte team in less than 18 months.
“It was built using proprietary data assets and bringing together third-party data assets – for example, including geographical data, financial information and estimates, and customer reviews and ratings alongside Deloitte’s proprietary data,” says Aaron. “We have data on over 2.8 million Australian private companies, including what the business does, their shareholders, financial statements, and who we have relationships with. DealiD has changed our interactions with clients, where we now work collaboratively to assess targets opportunities and we can be proactive, get in early, and come up with qualified options.”
In developing this digital asset, the team was focused on understanding how PE firms were typically looking for deal opportunities and how to digitise and improve the process.
“What started with an idea was tested with our closest clients and refined based on their feedback. While target screening can be a complex and a time-consuming task, we focused on the areas that could be automated. What used to take weeks to go through, now only takes a few hours with DealiD. We can efficiently bring more insights than any one specific view, made possible by teamwork and our mixed skillsets,” says Khushbu.
Damian adds, “The technology has been great. It applies an analytics layer to organise data sets, coding sets to identify target attractiveness, and a concise user interface to bring disparate assets together in a meaningful way so that we can explore them efficiently.”
Inspirational client feedback
In his regular discussions with PE firms, Aaron is delighted with the market response to DealiD.
“Being able to give our clients a report card, and attractiveness score for a list of vetted companies, in record time is fantastic. They say they haven’t seen anything like this before. It’s a differentiator for Deloitte – we’ve embraced innovation to push the envelope! Whether they’re investing in a company before it lists, or taking a majority or a minority stake, these PE firms bring much needed capital and commercial nous to small and mid-sized companies to help them achieve their objectives. It is great for the Australian market and economy.”
The team is excited to push the boundaries higher and higher, continually looking to see how they can add different data sets and algorithm layers into DealiD.
Damian concludes, “Our data is additive to our industry knowledge, and we are identifying industry themes to benefit all our PE clients. More broadly, we’ll start looking to see what we can do in the Asia Pacific region because we believe our winning formula will work at scale.”
Aaron has 19 years’ experience in investment banking across mergers & acquisitions and equity capital markets working for Macquarie and UBS. Aaron provides advisory services to both private and public companies on mergers, acquisitions, divestments and public & private capital raising transactions. Aaron has worked across a broad range of industries including technology, financial services, mining services, infrastructure services, healthcare, consumer products, business services, retail, media, telecommunications, and manufacturing. As a senior member of Macquarie Capital for 14 years, Aaron has a strong understanding of corporate strategy, business development, M&A and positioning corporates with investors.
Kurtis has more than 15 years' experience working across financial advisory with a focus on due diligence and profit improvement projects. Kurt is an innovator and a lead Partner for the Deloitte Global offering, iDeal, a global tool embedding data analytics into financial due diligence which he was involved in developing. He leads the domestic iDeal offering within Australia. Kurt has been engaged on a number of complex due diligence projects requiring detailed data analysis and manipulation to drive deal insights through granular analysis of financial and operational performance data.