Dealmakers Seek New Ways to Navigate Challenging 2023 M&A Environment

SAN FRANCISCO, Dec. 22, 2022 -- Dealmakers are preparing to embrace new, data-driven approaches to identifying and completing transactions in 2023, according to a survey of industry participants from SourceScrub, the premier deal-sourcing platform.

After a difficult 2022 – in which M&A activity slowed abruptly, valuations slumped and the cost of financing soared – dealmakers are seeking fresh ways to cope with the turmoil and successfully target acquisition opportunities, as they face pressure to deploy more than $2 trillion in capital in a timely fashion. The findings are contained in the report “Dealmakers and the Future of Data: Research Reveals What’s Next.”

“Many potential purchasers are feeling increased pressure to pursue acquisitions as the year draws to a close,” says Tyler Fair, co-founder and co-CEO of SourceScrub. SourceScrub’s deal-sourcing platform features cutting-edge data and analytics tools that provide dealmakers with in-depth information on more than 12 million businesses. “The survey results demonstrate that the key to success in 2023 will be direct sourcing of deals – and that having timely, thorough and actionable data will be vital.”

Key survey findings:

• 66% of respondents feel increased pressure to source deals directly due to deal volume slowing down.
• 78% believe using data to quickly and accurately find and close deals will become even more crucial in the next 6-12 months.
• But old habits die hard. The most common method for finding, researching, and connecting with deals is still intermediaries and networking, at 88%. This is followed closely by manually searching through conference lists and industry guides (84%) and Google searches (78%) — highly manual sourcing tools that simply don’t support the speed or scale dealmakers need to succeed.
• 41% report that they use data only to answer “basic questions periodically”; another 16% either say that using data isn’t a priority or that they don’t do much with the information they get from their data providers.
• Just 27% of dealmakers are able to confidently say that they have never overlooked or lost a deal due to a lack of actionable, relevant, high-quality data.
• 60% want to boost deal flow in 2023, while 49% say identifying higher-quality deals is a top priority.

The SourceScrub survey, completed in November, also revealed a still-large gap between the data-driven goals private equity firms, corporate development executives and other dealmakers cite for the next six to 12 months, and the extent to which these firms are using sophisticated data techniques today. For instance, only 27% of respondents say they routinely use data to test and refine their investment theses or develop proprietary scoring algorithms to improve the quality of their target list and obtain insights into potential acquisitions.

The SourceScrub survey sheds light on the steps dealmakers need to take for data to become truly transformative to their activities. When asked about the biggest challenges preventing their firms from more effectively using data, just 16% of dealmakers select “not having enough data to generate meaningful insights,” while 30% claim they have too much data scattered across sources. A remarkable 72% of firms have no one who is responsible for managing that data, incorporating it into models and analyzing it. And a majority of respondents rated the actionability, completeness and freshness of the data they have as only “okay” or “not great.”

“To realize the full potential of direct sourcing in 2023, dealmakers will need to maximize the caliber of the data they are collecting, ensure that they’re receiving and analyzing all the signals that data contains, and that they’re incorporating it into a robust sourcing process,” adds SourceScrub’s Fair. “Since all signs point to lower deal volume in 2023, obtaining actionable and timely insights into private companies is mission-critical for dealmakers.”

The survey was conducted with 96 dealmakers across private equity, investment banking, and corporate development.

About SourceScrub

SourceScrub is a market-leading deal sourcing platform for investment and M&A firms looking to research, find, and connect with founder-owned companies. Founded in 2015, SourceScrub provides deal-ready data, purpose-built tools, and on-demand data operations to give firms a decisive advantage so they never miss a deal. For more information, see https://sourcescrub.com.

Contact for media: press@sourcescrub.com.