Deal Networks and the Evolution

of Getting M&A Deals Done

>

New research reaffirms growing influence of social media and

deal sourcing networks on the M&A industry.

Executive Summary
In 2013, Intralinks conducted a global survey of M&A dealmakers to understand how
technology and specialized deal networks influence M&A deal sourcing. Two years
later, in December of 2015, Intralinks conducted a follow-up survey to measure how
attitudes towards, and adoption of, these technologies have shifted over the last
two years. Over 700 dealmakers from around the world participated in the survey.
Highlights from the 2015 survey include:

intralinks.com

Awareness of the Value of Online Deal Sourcing Is Growing

36% of respondents agreed with the statement that online deal sourcing will
eventually revolutionize the M&A industry - in 2013, that number was only 23%.

Online Deal Sourcing Is Mainstream

More than 33 percent of dealmakers currently use an online deal network to
support deal sourcing. Of them, nearly 50 percent of sell-side M&A professionals
have marketed at least one deal online in the last 12 months, and 28% have
marketed more than five deals in the last 12 months.

Online Deal Sourcing Succeeds in Closing Transactions

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.

Online Deal Sourcing Expands Reach to New and Qualified Counterparties

Two out of three deal-makers agree that online deal sourcing allows them to
identify counterparties they otherwise would not have found.

Conventional Social Media Platforms Are Losing Favor

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.

Reach your closest Intralinks office:

intralinks.com/mylocation

As more dealmakers and deal activity transition online into specialized deal sourcing
networks, it is becoming increasingly important for M&A professionals to incorporate
online deal sourcing into their broader dealmaking and social media strategies. The
immediate benefits of doing so are visible in the results of the survey: on the buy-side,
instant amplification of deal flow pipeline(s) with relevant, actionable opportunities. On
the sell-side, the almost omniscient ability to instantly identify the perfect buyers or
investors for any deal situation anywhere in the world translates into higher close
rates, more-competitive auctions and, in parallel, shorter deal timeframes. In short,
dealmakers are getting more revenue at less cost through specialized networks.
Over the longer term, the importance of being a denizen of online deal sourcing will
transcend the pure utility and efficiency benefits, and ultimately revolve around being
part of a community. In the highly-fragmented M&A industry particularly the middle
market gated, specialized deal networks offer not only a real-time forum in which to
accelerate dealmaking, but a trusted community in which members know that deals
and relationships are trustworthy. In the future, the cost of not being in a global deal
sourcing network may be equal to, even greater than, the benefit of being in one. In
other words, if youre not in, youre out.
Specialized deal networks are always present at financial technology trade shows,
where you can speak with them and gain more understanding. Whether ones firm is
ready to embrace online deal sourcing or not, we recommend an in-depth analysis
of the deal network landscape in ones specific area of activity be it M&A, venture
capital, real estate, etc. and specifically investigate:

The key players who are they and how do they differ

Different membership plans offered (in many instances, membership is free)

Requesting a free trial, along with references

Which, if any, firms in ones peer group have already joined a deal network

What are friendlies/competitors saying about online deal sourcing success (or
lack thereof)

Introduction
Survey Respondents
In December of 2015, we asked more than 700 qualified professionals actively
involved in the M&A industry about the way technology and specialized deal networks
are influencing how M&A transactions are sourced, and their attitudes towards
these technologies. Respondents to the survey varied by experience, seniority and
geography. The split between buy-side and sell-side was about even, with 56%
identifying themselves as buy-side professionals and 44% identifying as sell-side
ones. The large majority of respondents came from North America (60%), followed by
Europe, Middle East and Africa (EMEA) (18%), Asia Pacific (14%) and Latin America
(8%). With half of respondents indicating their title as director level or higher, there
was a wide variation in job title, as well as across M&A industry segments in which
respondents worked.

In Which Region Do You Work

APAC

North America

EMEA

LATAM

What is Your Job Title

C-Level/Partner/Owner
Associate

VP/SVP/EVP

Director

Manager

What Segment of the M&A Industry Do You Participate In

Lower middle market

Bulge bracket

Middle market
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Findings
Online Deal Sourcing Adoption to Grow over Next 12 Months
In terms of overall enthusiasm for online deal sourcing, our 2015 survey showed
significant growth versus our 2013 survey. In 2015, 36% of respondents agreed with
the statement that online deal sourcing will eventually revolutionize the M&A industry,
whereas in 2013 that number was only 23%.
The results of our 2015 survey indicate that, while overall adoption of online deal
sourcing has remained consistent with 2013 levels at 30%, the composition of said
adoption between the buy-side and the sell-side has shifted materially. On the buyside, adoption of online deal sourcing increased from 27% in 2013 to 31% in our 2015
survey. Naturally, part of this increase is attributable to the fiercely competitive deal
sourcing landscape seeded by two years of record-setting M&A activity. The sellers
market that arose as a result rewarded strategic and financial acquirers who invested
in better, faster deal sourcing tactics and technologies (like online deal sourcing).
The growing popularity of online deal sourcing in its own right, however, also played
a role, driven by ongoing factors such as: (i) growth in awareness (the space is still
less than ten years old), (ii) continued customer-driven product evolution, (iii) natural
progression of younger, more tech-savvy M&A professionals into positions of authority
and (iv) the rising perception that online deal sourcing networks are indeed driving
M&A success, as evidenced by the results of this survey and the mounting number of
deal network-facilitated success stories being announced publically.
On the sell-side, on the other hand, reported adoption actually declined, dropping
from 45% in 2013 to 36% in 2015. We submit that the decline in sell-side adoption
is, more than likely, the result of a materially different sell-side composition than in
2013. Among other things, the 2015 sample contained a disproportionate number of
respondents hailing from bulge bracket firms, as well as a larger proportion of surveytakers identifying as VP-level and above in title. Both of these are categories where
online deal sourcing penetration is significantly less prevalent.
One final factor we believe influenced the decline in sell-side adoption - and which
may have slowed down industry adoption overall - is the recent introduction of
versioning and paywalls by some specialized deal networks. When online deal
sourcing was in its infancy, free access to sell-side users was almost universal.
Recently, however, leading networks have gradually begun transitioning away from
these historically aggressive pricing strategies and instituting necessary rate hikes to
normalize price points for some of their premium services. The net upshot is likely a
pricing-out effect for firms not yet accustomed to paying membership fees.
Of the 65% of respondents who do not yet participate in online deal sourcing, the key
reason cited for not doing so is that they are waiting for the online deal sourcing space
to mature further. This suggests that, while online deal sourcing has proven its mettle
with early and mid-stage adopters, a large amount of late adopters are standing by
for greater industry validation and acceptance. That said, 23% of sell side and 34% of
the buy side dealmakers stated that they intended to adopt online deal sourcing in the
next twelve months.

While Adoption Has Remained Steady, Usage Has Grown

Of both buy-side and sell-side respondents who reported using online deal
sourcing (33% of total respondents), overall usage and productivity defined
by deals marketed online and deals sourced online, respectively saw strong
growth compared to the 2013 survey. For instance, on the sell-side, 49% of M&A
professionals marketed at least one deal in 2015 via a deal sourcing network, and
28% marketed more than five deals.

How many deals have you marketed using an online deal sourcing platform
over the last 12 months

20+
10-20
5-10
1-5
0
0

20

40

60

80

On the buy-side, usage growth is equally robust, with nearly 85% of respondents who
use deal sourcing networks reporting that they source deal opportunities online, and
almost one-half (44%) reporting that their firms source between 11% and 50% of their
total deal flow via online deal sourcing.
What percentage of your firms total deal flow is coming from deal sourcing
networks?

51%

26-50%
0-10%
11-25%

Buttressing these usage gains is overall sign-in activity. While three out of four
respondents sign in to online deal sourcing platforms a few times per mon th, 33%
claim to sign in on a daily basis, and another 19% report signing in at least once per
week. Frequent sign-in activity of this magnitude confirms deal sourcing networks
value not just for dealmaking, but for professional networking, relationship building
and research.
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Have you ever closed a deal sourced on an online deal sourcing platform

Yes (44)
No (54)

Which Online Deal Sourcing Platforms Do You Use?

Intralinks Dealnexus
Axial
DealMarket
DealGate
MergerNetwork
Other
I dont subsribe to any
0

20

40

60

80

100

In terms of effectiveness, respondents once again reported high levels of success

driven by deal sourcing networks, with 45% and 39% of buy-side and sell-side
professionals, respectively, claiming that they had closed a deal using an online deal
sourcing platform. The growing number of published deal network-facilitated success
stories which have emerged over the past two years seem to support these success
rates.
M&A Professionals Dropping Conventional Social Media Networks in Favor of
Specialized Ones
In 2013, we predicted that conventional social media networks like LinkedIn and
Twitter may be peaking out in terms of their capacity to support M&A dealmaking
activity. The results of our 2015 survey validate this prediction. Daily LinkedIn usage,
for instance, has remained constant with 2013 levels at 21%. Daily usage of Twitter,
on the other hand, declined markedly, dropping from 17% in 2013 to 10% today.
Established online databases like Capital IQ and Bloomberg also saw decreases in
daily usage versus 2013, dropping from 22% and 21% daily usage levels, respectively,
in 2013, to 20% and 18% daily usage levels today.
Meanwhile, specialized online deal sourcing platforms appear to be gaining a more
loyal daily audience, with 30% of users reporting that they sign in on a daily basis.
This trend is particularly visible on the sell-side with investment bankers and M&A
advisors, 45% of whom reported that they would like to see the process of buyer
research/identification innovated the most, followed by 42% who identified marketing
a deal as the area they would most like to see innovated. Both of these processes are
exactly what online deal sourcing was designed to streamline.

The underlying story behind this migration is self-evident: before the emergence of
specialized deal networks, even forward-thinking, tech-savvy M&A professionals
much less their Cro-Magnon counterparts - had few choices available to support
their deal processes. As such, they would adopt and repurpose an array of different
solutions, each one assisting a different piece of the deal lifecycle: MS Office for
drafting teasers and CIMS; CapitalIQ to research buyers (based on historical buying
patterns); phone, email and LinkedIn to make first contact and pitch the deal; Excel to
track, well, everything; and so on.
The arrival of online deal sourcing about eight years ago ushered in a new, muchanticipated way of doing deals. Rather than using and repurposing bits and pieces
of a disparate set of products and solutions, M&A professionals could now count on
a single platform custom-designed to support the specific pain points, nuances and
sensibilities of the M&A deal process. Why, for instance, research buyers on CapitalIQ
or FactSet based on historical buying patterns when an online deal sourcing platform
can yield the perfect buyer set based on their real-time user-submitted investment
criteria? Why invest heavily in a dedicated outbound deal origination team, when a
deal network can autonomously source exponentially more deals at a fraction of the
cost? Why use LinkedIn to vet potential counterparties when gated deal sourcing
communities already screen every member before they are admitted?
The steady exodus implied above confirms that, the M&A industry, like myriad
industries before it, is embracing technological disruption. Deal-makers are leaving
behind the off-the-rack solutions of old and opting instead for bespoke, specialized
deal networks to manage their deal processes.
Summary of Key Findings

Enthusiasm: Overall enthusiasm for online deal sourcing has increased by

over 50% since 2013, with 36% of total respondents today agreeing that it will
eventually revolutionize the M&A industry, versus 23% in 2013.

Adoption: More than 33% of dealmakers polled use an online deal sourcing
network to support deal sourcing.

Buy-side adoption of online deal sourcing is now up to 31%, versus 27% in

2015. In addition to two years of record-setting M&A activity, other factors
influencing buy-side adoption include growing awareness of online deal
sourcing, career progression of tech-savvy millennials and rising perception
that specialized deal networks are driving M&A success.

Future Adoption: 23% of sell-side and 34% of the buy-side dealmakers stated
that they intend to adopt online deal sourcing in the next twelve months.

Usage: Usage of online deal sourcing has grown significantly since 2013. On the
sell-side, for instance, 49% of M&A professionals marketed at least one deal in
2015 via a deal sourcing network, and 28% marketed more than five deals.

On the buy-side, meanwhile, of the respondents who already use specialized

deal networks, almost one-half (45%) reported that their firms source
between 11% and 50% of their total deal flow via online deal sourcing.

Sign-in activity is also on the rise, with three out of four respondents signing
in to online deal sourcing platforms a few times per month, 30% signing in
on a daily basis and another 23% signing in at least once per week. This
underpins deal networks growing role as a professional network, in addition
to a deal-making hub.

While daily usage by deal-makers of conventional social media channels like

LinkedIn and Twitter as well as databases like CapitalIQ and Bloomberg
have stagnated or declined, daily usage of specialized deal networks has
increased. Today, 30% of deal-makers who use online deal sourcing, sign in
to specialized deal networks daily.

Closed Deals: Once again, reported member success on specialized deal

networks was high, with 45% and 39% of buy-side and sell-side professionals,
respectively, claiming that they had closed a deal facilitated by an online deal
network.

Customer Spotlight
Donald W. Grava, founder and president of Versailles Group, LTD.
As the digital age continues to evolve, its clear that M&A is also evolving into the
use of digital tools. 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. Sometimes gaining this type of coverage can be difficult to obtain.

As the digital age

continues to evolve, its
clear that M&A is also
evolving into the use of
digital tools.
Donald W. Grava, founder and
president of Versailles Group, LTD.

Digital tools, such as Intralinks Dealnexus, provide an excellent tool for exposing a
transaction to multiple parties virtually instantaneously. The same type of coverage
that Dealnexus provides would take an enormous amount of time and resources. Most
importantly, the manual effort would not be as efficient.
Dealnexus is easy to use and provides definitive results. Intralinks has done an
excellent job in making the interface very user friendly and intuitive. On one particular
transaction that Versailles Group posted, Dealnexus generated exposure to almost
400 possible buyers. Thats the power of a robust tool like Dealnexus in the digital
age.

Recommendations for Dealmakers

As the results of our 2015 survey show, dealmakers are gradually transitioning
away from larger, conventional social networks like LinkedIn and Twitter in favor
of specialized deal networks, better-suited to the specific nuances and needs of
dealmaking. Established databases like Capital IQ and Bloomberg have fared better
but still seen nominal decreases in daily usage.
Meanwhile, the growing usage of, success on and enthusiasm for specialized deal
networks suggests that online deal sourcing networks remain in a high-growth state.
Dealmakers who have already adopted and operationalized deal networks stand
to gain from this rapid growth on both the buy-side and the sell-side. On the buyside, corporate development and private equity professionals will continue enjoying
privileged visibility and access to an exponentially increasing pipeline of deal flow.
On the sell-side, investment bankers and M&A advisors will retain intelligence and
efficiency advantages over their later adopting peers, as more and more strategic and
financial acquirers join the top deal sourcing networks.

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. Todays highly-specialized deal sourcing platforms represent the
culmination of almost a decade of development driven by extensive customer
feedback directly from the M&A community. The result is a mature set of products and
solutions custom-tailored to deliver greater dealmaking intelligence, efficiency and
security at a fraction of the cost of older methods. Most importantly, in an otherwise
fragmented industry, online deal sourcing networks offer the only true gated
communities of any substantive scale for qualified dealmakers to find one another and
interact.
M&A professionals who have not done so already ought to undertake a
comprehensive analysis of online deal sourcing activity in their respective space and
ascertain (i) who the main players are, (ii) how they differ from one another, (iii) the
proportion of their peer network already signed up and (iv) the level of success their
peers are having on specialized deal networks.
The most logical starting point is to simply contact one or more specialized deal
networks to get more information, schedule a live demonstration, and request
customer references. After that, one should inquire about whether they qualify for a
free trial or, at the very least, some kind of preferential pricing terms first-time member.
These are concessions that leading deal networks will often make. Finally, if, after all
of this, a firm is still not ready to join a specialized deal network, it should make it a
point to schedule a follow-up evaluation of the matter in the future.
As the results of this survey attest to, a lot can happen in two years.

About Intralinks
For 20 years Intralinks has been serving the M&A community to simplify and
accelerate the deal process. With the industrys leading virtual data room, Intralinks
continues our history of innovation to give deal professionals the tools they need to
help them manage the full M&A lifecycle - to get more deals done, faster.
Intralinks helps speed strategic transactions such as mergers, acquisitions,
divestitures, capital raises and corporate restructurings, helping your team control
the deal process from sourcing through to closing. Intralinks also supports sourcing
of new deal opportunities. Intralinks has the largest global deal sourcing network in
existence, combining intelligent, real-time deal sourcing tools, with an immersive,
members-only professional network. More than 7,500 firms in over 100 countries are
making millions of connections on thousands of actionable M&A opportunities. All right
now, in real time. Intralinks helps M&A professionals close more deals, faster.
More than 3.1 million professionals at 99% of the Fortune 1000 companies have
depended on Intralinks. With a track record of enabling high-stakes transactions and
business collaborations valued at more than $28.1 trillion, professionals at the 50
largest global banks and 25 largest law firms use Intralinks.

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