Over Half Of M&A Pros See Deals Collapse Because Of GDPR: Study

GDPR may or may not have slowed down email marketing. But there is one thing that it has put a brake on: mergers and acquisitions, according to DueDiligence 2022, a study by Merrill Corp.

Of 539 M&A pros surveyed in in Europe, the Middle East and Africa, 55% said they had worked on transactions that fell through because of concerns about a target firm’s data practices and GDPR.

In addition, 66% believe GDPR will increase acquirers’ scrutiny of data protection policies and processes of target firms. Only 22% say there will be no impact, and 10% feel GDPR wall decrease scrutiny.

The number of those who expect greater scrutiny is slightly less in Europe (63%) and more in the Nordics (71%) and Africa (70%).

“Data security and privacy are a real issue,” states Matt Henderson, transaction services partner at Deloitte. 

He adds: “On the vast majority of deals we sign up to confidentiality clauses, non-disclosure agreements and our engagement letters have very clear wording around use of data, which we’ve updated to capture GDPR rules.” 

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The survey also reveals that 46% feel machine learning will have the greatest long-term impact on M&A due diligence. And 37% feel that way about predictive analytics. In addition, 32% say that data analytics will help in accelerating the process.

Another issue is hosting of transaction data. Overall, 47% feel it should be located in the country of the transaction, 18% in the EU, 6% in the UK and 3% in the U.S. But 26% have no preference.

European respondents are slightly less likely to choose the U.S.,and Middle Eastern professionals are more likely.

In general, 65% say thorough due diligence is essential in managing the M&A process, along with planning and achieving integration (49%). In addition, 35% cite identifying/screening/prioritizing targets and 32% cite understanding and addressing cultural issues. 

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