Harnessing data analytics and digital trends for M&A success

In the fast-paced world of mergers and acquisitions (M&A), the integration of data analytics and digital trends has become essential for private equity (PE), private capital (PC), and venture capital (VC) organizations. In a recent webinar with the Canadian Venture Capital and Private Equity Association, we highlighted the critical role that technology and data analytics play in driving successful M&A transactions, enhancing decision-making, and creating value for organizations and portfolio companies.

The M&A market is currently shaped by a combination of investor confidence and the need for businesses to adapt to changing market conditions and geopolitical challenges. This environment presents opportunities for PE and VC firms, however the potential for U.S. tariffs introduces a layer of complexity that may temper deal-making appetite.

As firms navigate this landscape, they are increasingly utilizing data analytics and digital tools to assess risks, optimize valuations, identify strategic opportunities, and enhance decision-making processes. This cautious approach indicates that while the number of transactions is on the rise, firms are likely to proceed with greater deliberation. The integration of data analytics empowers organizations to pinpoint potential acquisition targets and evaluate their worth with greater accuracy. This capability is especially vital in a competitive market, where informed decisions can significantly impact the success of a deal, particularly in light of the uncertainties introduced by tariffs.

Data analytics has emerged as a game-changer in the M&A process, enabling firms to make informed decisions based on real-time insights. According to a recent KPMG survey, 60% of respondents plan to increase their investment in AI and generative AI technologies over the next 6-18 months.¹ This trend indicates a growing recognition of the potential of these technologies to drive operational efficiency and cost optimization, which are critical factors in successful M&A transactions.

The integration of digital tools into the M&A process not only accelerates decision-making but also enhances the quality of insights derived from data. This capability allows firms to gain a deeper understanding of potential acquisition targets and make more informed decisions.

The survey results indicate that operational efficiency and cost optimization are among the areas where AI and Generative AI technologies can have the greatest impact on PE and the overall deals industry.² Organizations need to focus on enhancing customer relationships, integrating value chains, and optimizing ERP systems to drive value creation.

As organizations embark on their digital transformation journeys, assessing their digital maturity becomes crucial. Firms that invest in digital readiness are better positioned to maximize the potential of their investments and achieve favorable outcomes during M&A transactions.

KPMG International’s survey findings further reinforce this perspective, revealing that globally, organizations that invest in properly designed and sourced ERP solutions can save up to 40% in IT costs, reduce inventory levels by 38%, and decrease cycle times by 35%.³ These tangible benefits highlight the importance of digital maturity in enhancing operational efficiency and driving value creation.

Digital readiness involves not just the technology itself, but also the organizational culture and processes that facilitate its effective implementation and use. Firms must equip employees with the necessary skills and knowledge to leverage digital tools effectively. This involves investing in training and development programs that foster a data-driven culture within the organization.

The application of AI in M&A processes is transforming the way firms conduct due diligence, source deals, and analyze data. AI can be used to parse a set of financial statements, contracts, or legal documents, significantly reducing the time and effort required for manual analysis. This capability not only saves time but also enhances the accuracy of analyses, allowing firms to make more informed decisions.

The survey data indicates that the use of AI in driving value creation is still in its early stages, with 15% of respondents reporting widespread adoption. However, the potential for growth is significant, as 79% of respondents indicated that AI is occasionally used in their organizations.⁴ This presents an opportunity for firms to invest in AI technologies and develop strategies to integrate them into their M&A processes effectively.

AI can also enhance the quality of insights derived from data, enabling firms to identify trends and patterns that may not be immediately apparent through traditional analysis methods. By leveraging AI, organizations can gain a competitive edge in the M&A landscape, making more informed decisions that drive value creation.

To fully harness the power of data analytics and digital tools, organizations must foster a data-driven culture. This involves not only investing in technology and equipping employees with the necessary skills and knowledge to leverage these tools. By empowering employees to utilize data analytics in their decision-making processes, firms can enhance their overall performance and drive better outcomes in M&A transactions.

A data-driven culture also encourages collaboration and innovation, allowing teams to share insights and best practices, which can lead to more effective decision-making and improved performance in M&A transactions. Organizations should prioritize developing a data-driven mindset among their employees, emphasizing the importance of data in driving business success.

KPMG in Canada is committed to helping private equity, private capital, and venture capital organizations navigate the complexities of M&A by leveraging data analytics and digital trends. Our team of professionals provide tailored solutions that enhance decision-making, streamline processes, and drive value creation. With a focus on digital readiness and the integration of advanced analytics tools, KPMG empowers private equity, private capital, and venture capital organizations to help maximize their investments and achieve successful outcomes in their M&A endeavors.