Dealmakers are realizing the importance of incorporating online deal sourcing into their broader dealmaking and social media strategies, according to a survey conducted by Intralinks Holdings, Inc. This is especially the case as online deal sourcing networks continue to gain ground while social media businesses continue to soar.
The “Deal Networks and the Evolution of Getting M&A Deals Done” global survey says 36 percent of respondents agreed with the statement that online deal sourcing will eventually revolutionize the M&A industry. In 2013, that number was only 23 percent.
More than 31 percent of dealmakers currently use an online deal network to support deal sourcing. Of sell-side M&A professionals using online sourcing platforms, nearly 50 percent have marketed at least one deal online in the last 12 months and 28% have marketed more than five deals online in the last 12 months.
On the buy-side, nearly 85 percent of respondents who use deal sourcing networks reported that they source deal opportunities online and 44 percent reported that their firms source between 11% and 50% of their total deal flow online.
Among users of deal sourcing platforms, 45 percent of buy-side and 39 percent of sell-side professionals have closed a deal that was sourced on an online network. Sixty-two percent of deal-makers agreed that online deal sourcing allows them to identify counterparties they otherwise would not have found.
At least in terms of supporting dealmaking activities, dealmakers are eschewing the larger, conventional social networks in favor of “specialized” deal networks with more customized functionalities, with respondents citing lower daily usage of the former, but higher daily usage of the latter.
“The most important thing in middle market M&A transactions is to make sure that the buyer or seller receives exposure to as many targets or buyers as possible,” says Donald W. Grava, founder and president of Versailles Group, Ltd, a Boston-based investment bank.
“As online deal sourcing continues to go mainstream, it is more critical than ever for M&A professionals to at least gain an understanding of the online deal sourcing landscape,” explains Tony Hill, director of Intralinks Dealnexus.
“In an otherwise fragmented industry, online deal sourcing networks offer the only true ‘gated’ communities of any substantive scale where qualified dealmakers can find one another and interact. After surveying members of the largest dealmaker community in the M&A industry, our research proves that the prevalence of social dealmaking within the M&A industry is rising.”