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The Future of M&A - Sharpening your focus! What lies ahead for the 'global' economy?

There’s a great deal of speculation out there at the moment in terms of what lies ahead for the 'global' economy as well as a multitude of scenarios in terms of how the current pandemic will effect 'local' economies and how those local economies will engage with the international market place in the future. One thing is clear, how we understand the economy today has a direct impact on the world we create tomorrow. The more we understand how it works today and more importantly, what the emerging trends are and how changed habits can effect what happens ahead of the curve, the more we as investment professionals can have a say in what things might look like in future.

Economic concepts, ideas, and policies, and today, health issues will, and are shaping the institutions, and communities we live in. They will also influence with whom, commercial entities, private equity and venture capitalist firms choose to invest, whether that is via the provision of growth capital, equity stakes or buy-out transactions.

The speed at which technology develops, means that it is perhaps more difficult to predict what our economies might look like hundreds of years in the future however what we can do is to prepare ourselves for the economy of the near future?

It is on this foundation that we at BCMS Switzerland are basing our business today. Knowing where the opportunities lie involves deep research as well as conducting a regular investigation of the market temperature in terms of the industry sectors that provide a real-time response to the changing appetites of buyers at any given time.

Take a look at the web site of a private equity firm in the year 2000 and compare it to what that same websites states today, looking at the types of companies they are prepared to invest in, and it reveals how one company investing in the engineering sector over the previous 10 years is today no longer interested in mechanics. Today their focus is on a category whose definition didn’t really exist 20 years ago. Sectors such as "deep tech" or the "internet of things".

At the same time, whilst many investors have since jumped into investing or acquiring companies in the new economy such as "edtech" or the "monetisation of city traffic data", others have taken advantage of the diaspora of Private Equity houses away from the traditional industries associated with the last industrial revolution and become specialists in acquiring such companies. Primarily this is because they still form the mainstay of industry globally.

As the targets for acquisition or investment change every few years (and in this technological age on a more frequent basis), it becomes important for M&A brokers to keep up to date with the investment or acquisition interests of commercial entities, PEs and VCs so that in turn as M&A professionals they are able to select their own client’s based upon the correct market intelligence. What are buyers interested in today in 2020 and beyond? Do I as an M&A intermediary, have access to the type of sellers, industry and market sectors that are attractive to buyers & investors today?

BCMS Switzerland has recently completed a survey of more than 800 Private Equity and VC groups across Europe, visiting every website to understand what each of these companies are interested in. We investigated each firms geographic focus. We looked at the type of preferred participation. What about ticket size, turnover, investment volumes, assets under management? We looked at a plethora of other acquisition & investment criteria, however we mainly focused on the sectors that are of keen interest to PEs in 2020 and beyond. Assessing PE appetites also informs us about which sectors commercial buyers and industrial groups are interested in, both now and in the future.

The survey gleaned market intelligence from 13 countries in total and focused on 800 of the leading Private Equity and VC houses.

At the end of this article, you will find the full list of categories of interest to these 800 private equity firms. It lists the 300+ industry sector terms and target industries that we came across from each respective website.

The main subject of this article is to help buyers, sellers and brokers to understand exactly what private equity (and thereby commercial and strategic buyers) might have a preference for in the future economy given the current pandemic and how the crisis will change habits. The question is “what will acquirers be looking at in the future economy based on the fact that more and more people and businesses are reviewing their buying habits as well as how they engage in economic activity?”.

Clearly some sectors are obvious and will emerge in a stronger position. Consumer related sectors such as consumer goods, consumer internet services, e-commerce, & areas relative to a growing digital lifestyle.

From a B2B perspective it means that those services supporting consumer purchasing will also be of interest to investors or acquirers. These can be defined as consumer enabling technologies, adtech (advertising), algorithms, big data, customer targeting, customer service providers, business process outsourcing, call centres, data analytics, digital media, E-marketing, interactive media technologies, logistics, mobile services and apps, mobile banking and payments, on-demand services, data management and cybersecurity, cloud computing together with a whole host of consumer supporting B2B technologies.

Perhaps edtech as it relates to distance learning, training and education will also find growth, given a new dynamic in home working and flexible hours.

We could also talk about connected consumer services and technologies, connected life and even connected objects. Perhaps with growing digital connectedness and renewed awareness of how each of our lives link together we will see greater developments towards responsible consumption as we reflect not only on ourselves, but on how the way we as individuals behave, has a positive or negative effect on others.

It is clear that with the huge amounts of money going into medical research right now the sense of vulnerability experienced by people, companies and governments, may in fact boost investment across the board in areas such as biopharmaceuticals, biotechnology, drug development, healthcare, homecare, hospitals, silver economy products and services, life sciences, diagnostics, occupational health, the smart home industry, telemedicine, e-health, therapeutics, & well-being sectors of the economy. Health awareness has been growing at a phenomenal rate over the last 15 to 20 years and situations such as the one we face today will no doubt give greater impetus to the overall trend, making companies operating in these sectors highly attractive.

Even in manufacturing we can expect an acceleration of investment and acquisitions in areas relating to industry 4.0, such as AI, advanced tech and electronics, digital automatization, high-tech manufacturing, machine learning and robotics, micro-technologies and micro-electronics, predictive maintenance, and in areas such as virtualization.

I began this short article with a statement about the fact that economic concepts, ideas, and policies, and today health issues will and are shaping the institutions, and communities we live and work in. Advancing prosperous, inclusive and equitable economies and societies that provide opportunity for everyone to fulfil their potential have now come to the forefront of planning for the future.

It is true that globalization and technology have been powerfully transforming our economies, workplaces, communities and families for many years now, however today we are all thinking about the shape of how we engage in each these areas of our daily lives. Yet we also have to consider that there

has never been a better time to mobilize technology and to unleash the human capability to address the challenges brought to us on the back of covid-19 and shape a new socio-economic system.

I conclude with one aspect of the extensive results from our survey of 800 private equity and Venture Capital firms, a list of the investment and acquisition sector categories gleaned from 800 websites. Perhaps it will help you as a buyer, a seller or an M&A intermediary to think about where your future focus might lie.

5G networks | Access to care services | Accommodation | Adtech | Advanced services | Advanced Tech & Electronics | Advertising | Aeronautics | Aerospace | Agribusiness | Agricultural technology | Agriculture | AI | Algorithms | Animal health | APIs | Application Software | Architectural Services | Audio-visual | Automotive | Automotive Construction | Autonomous car | Autonomous driving | B2B Software | Banking | Big Data | Bioenergy | Biopharmaceutical | Biotech | Biotechnology | BtoB E-tourism services | Building Materials & Suppliers | Business Solutions | Capital Goods | Cardio-vascular devices | Care and Health Services | Catering | Chemicals | Civil Engineer

ing | Cleantech | Clinics | Cloud Computing | CO2 storage | Connected Consumer | Connected Life | Connected objects | Construction | Consumer | Consumer goods | Consumer Internet | Consumer services | Contributive production | Creative and Digital | CRM | Customer services | Customer Targeting | Cybersecurity | Data | Data analytics | Data center | Deep Tech | Defence | Diagnostics | Digital | Digital Automatization | Digital Communication | Digital Consumer | Digital health | Digital Lifestyle | Digital Media | Digital Transformation | Digitalisation of knowledge | Dining | Disruptive Technologies | Distribution | Distributors | Drones | e-Commerce | Eco-Technologies | Education | E-health | Electrical / Electronic | E-marketing | Embedded Systems | Enabling Technologies | Energy | Energy & utilities | Energy efficiency | Engineered products | Engineering | Enterprise Crossover | Enterprise data | Enterprise Software | Entertainment | Environmental services | Equipment for industry | Event Management | Extraction of renewable energies | Facilities Management | Financial services | Fintech | Food and Drink | Food safety | Food service | Future of Commerce | Gaming | Giftware | Green chemistry | Hardware | Health | Healthcare drug development | Heating and Ventilation | High-Altitude Platforms | High-tech manufacturing | Homecare | Hospitality | Hospitals | Human capital development solutions | Human Resources | Inclusion | Industrial | Industrial High Tech | Industry 4.0 | Information technology | Infrastructure | InsurTech | Interactive media technologies | Internet | Iot | Job creation | Laboratories | Legal Services | Legaltech | Life sciences | Logistics | luxury | Luxury Goods | Machine building | Machine components | Machine learning | Machinery & Capital Plant | Maintenance | Managed Services | Manufacturing | Maritime | Marketing & Advertising | Marketplace | Materials | Mechanical & Electrical | Media | Medical | Medical devices | Medical technology | Medtech | Memory | Mesh & Overlay Network | Microelectronics | Micro-technologies | Mobile | Mobile app | Mobile Banking | Mobile Computing | Mobile Impact | Mobile Payments | Mobility | Mobility as a service (MaaS) | Mobility insurance | Monetisation of city traffic data | Multimodality | Nanotechnologies | Network intelligence virtualization | Networks | New materials | New technologies | NewSpace | Occupational health | Office environment | Oil & Gas | Oil & gas technology | On demand Economy | Organizational models | Orthopaedics | Outsourcing and efficiency | P2P | Packaging | Paper | Payments | Pension | Pharmaceutical | Pharmaceutical research | Pharmacies | Physical Assets | Plastics | Predictive maintenance | Private schools | Process Industries | Processing | Production | Professional training | Proptech | Prototype | Rail | Real estate development | Recruitment | Recycling | Renewable energy | Rental and Hire | Research spin-offs | Responsible consumption | Retail Chains | Retail furniture | Retail services | Robotics | SaaS | Safety Test Measurement Inspection | Security | Self organization | Semiconductor | Sensors | Sharing | Sheltered housing | Sheltered retirement housing | Silver economy | Smart building | Smart City | Smart Hardware | Smart Home | Smart Industries | Smart Mobility | Smart Vehicles | Social mobility | Social web | Social Gaming | Software | Software Design | Sponsored Data | Steel | Sustainability | Sustainable Cities | Technology | Telecom | Telecommunications | Telemedicine | Textile | the Internet of Things | Therapeutics | Tourism | Trading Companies | Training Services | Transport | Transportation | Travel | UX - User Experience | Virtualization | Waste management | Water | Web services | Well-being | Wholesalers | Wood

Best regards - Simon Gregory BCMS Switzerland

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