One of the most transformative changes in the M&A field is the impact of AI and technology.
In an insightful interview with Toon Peeters, a seasoned M&A professional at Deloitte Belgium, we explore the evolving dynamics of mergers and acquisitions, the impact of AI and technology on due diligence, and the state of the Belgian M&A market.
Toon Peeters, based in Brussels, Belgium, is currently a Partner in the Mergers and Acquisitions Transaction Services team at Deloitte. With a career spanning 17 to 18 years, including a stint in San Francisco, Peeters brings a wealth of experience in auditing, business strategy, financial modeling, and more. Reflecting on his journey, he notes, “There has been a visible improvement in the quality and depth of the work we do. The work has become more complex, and the volume of data has increased, making it crucial to maintain structure and deliver results efficiently.”
The Belgian M&A market
Peeters provides a candid assessment of the Belgian M&A market, highlighting that while there has been some activity, the volume of large transactions is not at the expected level. “The larger volume of large transactions is still somewhat absent. There have been a few, but it is not the same volume as we would expect in a normal economic constellation”, he explains.
The economic context remains uncertain, impacting the frequency and size of deals. He cautions that the anticipated surge in transactions has yet to materialize. “We’ve been expecting this for about two years now, but it hasn’t happened yet”, he remarks. “Now we’re not expecting the absolute peak that took place during COVID-years in terms of M&A. That was really intense. But we are now seeing a light increase in number of transactions again. Because these transactions are often smaller, the total deal size remains somewhat lower.”
In this slower economic climate, current trading activity remains an extremely important factor in the due diligence process. Peeters: “It is essential that this remains confirmed so that the business plans and ambitions are realistic. The volumes achieved in the business may not be tops, but it is always good to see how the company has performed in the meantime and whether they continue to perform within expectations.”
The role of technology and AI in due diligence
One of the most transformative changes in the M&A field is the impact of AI and technology on the due diligence process. Peeters emphasizes the cautious yet proactive approach Deloitte takes in integrating AI tools. “In recent years, AI has become prominent. With what’s available in the public domain, like chat technologies, we have some great tools. However, we always need to be cautious with data security, especially with our clients’ and target confidential information”, he says.
The integration of AI begins with simpler tasks such as report writing, document screening, and initial analyses. However, Peeters notes the importance of rigorous testing before deploying these tools publicly to ensure confidentiality and cybersecurity. “We are very strict about this and have confidentiality agreements with our clients. We have to handle this very carefully, but we do invest heavily in it”, he adds.
Developing in-house tooling
Beyond leveraging existing AI technologies, Deloitte also focuses on developing in-house tools, coordinated within their North-South Europe and global member firms. This approach ensures scalability and efficient deployment across the entire organization. “We align developments with expectations across all firms and share investments and expertise, rather than developing separately in each member firm. This ensures scalability and allows us to deploy fully across the entire global member firm, not just in Belgium or any specific country”, Peeters explains.
ESG due diligence and financial risks
Gradually, the Transaction Services experts at Deloitte are also starting to see the movement towards the ESG (Environmental, Social, and Governance) topic. “It might not have gained the momentum we expected yet, partly because the real reporting requirements are only coming into effect next year”, says Peeters.
“Nevertheless, it is becoming a point of focus. External advice is being sought for this, which is positive. Additionally, we have made progress with Share Purchase Agreements (SPA) and contracts, where, of course, lawyers are in the driver seat. However, financial advisors also provide advice to properly cover financial risks. Over the last six months, we have been heavily focusing on this and have seen a lot of added value.”
A multidisciplinary approach
Deloitte’s multidisciplinary model, which includes teams with expertise in strategy, legal, finance, tax, ESG, operational, IT, HR, and cyber, is a key strength in addressing the diverse needs of M&A transactions. Peeters highlights the importance of this integrated approach, particularly when navigating compliance matters and complex transactions. “We have quickly adapted with people who are well-versed in compliance matters. This makes our MDM (Multi-Disciplinary Model) very powerful for clients, especially when certain topics are discovered along the way”, he says. “Especially, in our new set-up storefront.”
Looking ahead
The conversation concludes on a forward-looking note, with Peeters expressing optimism about the future of the M&A market. “There is more in the pipeline than six months ago. There is certainly progress in that area, which is interesting. But converting opportunities can take a bit longer”, the M&A expert observes.
In summary, Toon Peeters’ insights provide a comprehensive overview of the current state and future prospects of the M&A field in Belgium. The integration of AI and technology, combined with a multidisciplinary approach, positions Deloitte to navigate the complexities of modern transactions effectively. As the market continues to evolve, staying ahead of technological advancements and maintaining a flexible, client-focused approach will be key to success.
Read also: 10 major insights from the Deloitte Belgian M&A Predictions 2024
