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Tech-driven M&A deals ‘will continue beyond the pandemic’
Technology trends will continue to dominate the M&A market, both globally and in Australia, according to Allen & Overy’s latest M&A insights report.
Lauren Croft
A&O’s Q3 2021 M&A Insights report: Rethinking priorities as transactions boom looks at the new issues and trends impacting the global M&A market as well as post-pandemic trends in M&A litigation.
“Part of this trend is driven by COVID-19 itself, with digital infrastructure and the digital economy more broadly being resilient to the pandemic with the accelerated adoption of tech across society – from ecommerce to telemedicine, access to government services, and remote working,” he said.
“This will continue beyond the pandemic, with more deals focused on software-enabled solutions, automation and AI, analytics and deep tech.”
Additionally, the report notes that data and intellectual property are becoming increasingly central to M&A deals, Mr Calais continued.
“They are often seen as critical value-generating assets of a business, and their treatment – including from a separation, migration, and compliance perspective – is key to a successful transaction. We have seen regulatory requirements grow, largely driven by the EU but expanding globally; for instance, the General Data Protection Regulation, or GDPR, and recent proposals to regulate AI,” he said.
“The market has seen some of the consequences of cybersecurity risk, with governments and corporates increasingly exposed by virtue of their digital transformation initiatives. M&A deal-makers must factor this in and carry out far deeper due diligence around cyber-risk.
“Compared with traditional industry, tech-enabled sectors are achieving far greater scale more quickly now, thanks to large-scale cloud infrastructure and digital sales channels. Markets can be entered into more quickly, and new products created and deployed more easily. This invites global capital and strategic investors to scour the globe for M&A opportunities – not limited by national or geographic boundaries,” Mr Calais added.
There are also a number of global trends set to have an impact on the Australian M&A market moving forward – the growth of strategic collaborations and commercial alliances as an alternative to traditional M&A transactions being a strong trend.
“These collaborations between companies – driven by sharing of strategic IP, data and technology, product expertise, and market access – are increasingly seen as an alternative to M&A transactions, or a precursor to M&A for companies looking to ‘test’ a relationship,” Mr Calais said.
“We are likely to see strong growth of these collaborations here. Australian lawyers should be aware of this and of how they differ to other M&A transactions. They require a strong awareness of digital business models, an understanding of commercial drivers and risks, novel approaches to managing intellectual property and data, and a focus on generating value-accretive outcomes for both parties.
“We have seen interest from US strategic investors and private capital in Australian tech companies – particularly those who are category leaders (like Afterpay) or offer globally scalable platforms (like Canva). We hope this trend continues to drive innovation here,” he added.
Overall, Australian lawyers need to become more aware of these trends for future M&A deals in the Australian market.
“All companies in Australia – from banks to mining, telco to manufacturing – are underpinned by tech and data, and Australian lawyers must become more familiar with the ways in which tech, data and IP play a critical and strategic role on M&A here,” Mr Calais added.
“Clients operating in Australia will increasingly require sophisticated advice on data and IP in transactions – including commercialisation opportunities and risks, Australian regulatory compliance requirements, cybersecurity risk, and issues around data and IP separation and migration in this market.”
Lauren Croft
Lauren is a journalist at Lawyers Weekly and graduated with a Bachelor of Journalism from Macleay College. Prior to joining Lawyers Weekly, she worked as a trade journalist for media and travel industry publications and Travel Weekly. Originally born in England, Lauren enjoys trying new bars and restaurants, attending music festivals and travelling. She is also a keen snowboarder and pre-pandemic, spent a season living in a French ski resort.
