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Online Dating and M&A 2.0: Towards a New Kind of (Corporate) Loving?

I was just reading an article in the Wall Street Journal about people on dating sites using tiger photos to attract attention from potenotial squeezes. Some of these sites have some great techniques. It seems for example, that one site (Tinder), which is optimized for smartphone use, allows you to swipe right if you like someone’s post/photos and left if you don’t. If two people swipe right on each other’s post, they get to meet over the app. Neat eh?

That got me to thinking about the dating process for companies – you know, M&A and all that sort of thing. Why isn’t there something like that for companies? Why couldn’t you make the whole M&A process frictionless in a similar way? Peruse online all the potential matches in your own corporate universe and then swipe right. If the potential match also swipes right, then you meet. Wouldn’t that make things a whole lot easier?

Target identification for companies seeking a partner or acquisition is kind of like dating before the Internet. In the old days you had a matchmaker – in corporate parlance an investment banker - and they sought out possible matches from amongst their (limited) circle of contacts and clients. Or, if a company was doing the job itself, its corporate development people did much the same thing, particularly looking at suppliers and competitors.

Just like the old-time matchmaking process, the current M&A matchmaking process is similarly ineffieicnt. You look around the obvious suspects, run a few spreadsheet proformas and off you go, either with an offer, solicited or otherwise, and voila, they now yours and you are wedded for life – or not as the case might be.

And what has been result of modern corporate matchmaking? Well, all the research says around two thirds of acquisitions fail and of the remaining one-third, maybe half can be regarded as a runaway success. If a modern matchmaking site had figures like these, they would never get off the ground.

With all the bright ideas on the Internet, why hasn’t someone done this? The idea would be to have corporate universes of potential partners that you wouldn’t normally consider so that you dramatically increase the size of the corporate gene pool. As we all know, that is sometimes sadly lacking in diversity.

Wouldn’t this allow corporate matchmakers and investment bankers to start really thinking outside the box? What about a box maker and a gadget maker who both swipe right because they both see something that the processionals wouldn’t or couldn’t. Wouldn’t this unlock vast new sources of value which are currently totally untapped?

Of course, we are talking about yet another source of disintermediation in which the corporate M&A professionals and investment bankers might conceivably be edged out of the picture; that is, unless they got with the program and added it to their bag of tricks. Shouldn’t investment bankers have to catch up with the times too like everyone else?

I think that online corporate matchmaking services modeled on dating sites could unleash a new leap in business productivity and effectiveness. They could start with some of the innovations in matchmaking, such as automated matching algorithms like those used by sites such as Match.com, or swiping such as Tinder.com. But to be honest, I think that’s just the start.

With the right paradigms and software a corporate matchmaking site could automatically dial up different types of matches for you. Conventional matches. Unconventional matches. Out-of-this-world matches. By integrating databases of business data such as Hoovers they could also automatically dial up matches based on both basic valuation data (P/E etc.) and advanced ideas (declining valuation with highly innovative management teams, outside your industry for example).

I know everyone is going to tell me that this has been done, but not so. Some of it is indeed being done, but by hand. I am talking about industrializing the matchmaking process. Just like going from matchmaking by hand using a human matchmaker in human dating to industrializing the process with totally automated corporate matchmaking with no human intervention at all.

Suggested matches never ever sullied by human hands. That’s what I want.

In so doing you could dramatically reduce the enormous costs of the current human-based corporate match-making system in much the same way as the costs of dating are reduced dramatically by switching from human match-makers to automated dating sites. At the same time the pool of potential corporate matches would explode, just as occurs with dating sites which open up millions of people to the match-making process once it all goes online.

The aim of corporate matchmaking would thus be to dramatically increase the size of the corporate gene pool to allow for new types of matches creating dramatic new sources of value at a dramatically reduced transaction cost.

I call this new approach M&A 2.0. Its aim is increase marital bliss for companies, just like dating sites offer mere mortals. Guess what? It might even reduce the abysmal failure rate in M&A too.

If someone isn’t already working on this, I am sure it will be coming soon to a website near you.

 

 

 

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Saturday, 22 September 2018

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