What is DealCircle?
DealCircle is a digital M&A solution and partner of hundreds of M&A advisors. We support them in identifying buyers and approaching the market. This gives investors access to a comprehensive deal flow of relevant projects. Especially for strategic buyers, DealCircle is an efficient tool to implement a growth strategy through acquisitions.
Before we go into this brief description in detail, I would like to know what “DNA” DealCircle has. Since when has DealCircle been around and what inspired you to start the company?
We were recently a partner at a mid-cap private equity fund. In addition to the execution of new investments, we were also responsible for deal sourcing from M&A and corporate finance advisors. These have repeatedly told us how difficult it is to find suitable buyers. We wanted to simplify this process and bring transparency to this very fragmented market with the help of a database. This is how the idea for DealCircle was born.
What is special about DealCircle?
From the point of view of the M&A advisor, it is certainly the very large buyer database with over 115,000 buyer profiles. However, this does not automatically mean that the buyers are in tough competition for the good projects. In fact, the large buyer universe is a key factor why professional M&A advisors see DealCircle as a value-added service for their projects. The buyers can be introduced to very good projects, which they would often not have seen without DealCircle.
What is special about the proprietary buyer database?
Through a big-data approach, DealCircle collects deal-relevant information on thousands of companies with M&A activity on a daily basis. Thanks to intelligent extraction of information from different data points, such as transaction reports, the buyer profiles are structured and consolidated. Not only generic information such as industries, sectors, regions or quantitative dimensions is collected, but also detailed information about niche markets, products or technologies, so that “perfect buyers” can be identified more easily. Thanks to the automated data collection, foreign strategic buyers can be identified just as easily as German investors. The transparency with regard to the search profiles of M&A-affine foreign strategists thus increases immensely. A further advantage of this data-based approach is a very high transparency of the portfolio companies of financial investors. This makes it possible to address larger financial investors for smaller transactions as well, who are usually open for relevant add-on acquisitions.
In recent months, the M&A market has experienced a considerable slump. To what extent does DealCircle as a deal sourcing tool also feel the impact?
DealCircle is currently – despite Corona – conducting market approaches for more than 6 new M&A projects per week and is therefore in contact with hundreds of buyers every week. However, there has been a shift in project sizes, so that since April, mainly small-cap transactions in the single-digit million turnover range have been marketed. This market segment seems to be much less affected by the corona effects than large transactions…
… but that also means that you are currently familiar with the M&A strategies and buying intentions of many investors, right?
The high number of contacts with buyers is perceived as a great advantage by M&A advisors. A managing director of a Big 4 M&A consultancy, for example, highlighted this very fact as an advantage in working with DealCircle. The combination of the innumerable points of contact with buyers and the structured processing of the search profile data is of high added value, as the secret M&A strategies of many strategists become more transparent and can be used specifically for market approaches.
I remember the Actual Keyword in the M&A REVIEW, which you wrote in issue 03/2020. And what about all those algorithms with the human component?
The human component is and will remain very important and is essential in order to carry out a company sale successfully. However, digital M&A tools such as DealCircle can increase efficiency and give advisors more freedom to provide comprehensive personal process support.
Is the cooperation with you a black box for the M&A advisors and does he lose the process sovereignty?
No, not at all. We try to adapt as much as possible to the processes of the M&A advisor. Of course, this includes full transparency for the advisor as to which interested party is addressed with which information. The consultant receives our shortlist for approval and discussion with the client. In the sales process we are then completely impartial and neutral and leave the project management to the consultant.
I have understood the added value for the M&A advisors. But how do you help the buyer?
For potential buyers, such as corporates or financial sponsors, we assume the role of a meta-dealsourcing tool, as we provide the relevant deal flow of hundreds of M&A advisors. Buyers no longer have to try to keep in touch with these many advisors, but can let us introduce them to transactions that fit their profile.
