Swipe Right to Merge: How Companies Find Love

If you’re Coca-Cola, AutoZone, or Sherwin-Williams 1) congrats on making the Fortune 500 and 2) if a merger’s on the table, you should have a pretty clear idea of who you could do it with. If you don’t know No. 2...maybe we should reassess No. 1.

But as a small or midsize company, the universe of potential merger matches explodes from the circle of nice boys your grandma knows to the recently single pool from second semester college. The way you mapped that uncharted territory isn’t so different from how many companies navigate the M&A market today: online platforms that connect users to potential matches.

But first, the old ways

Eager execs ready to find their company a partner-in-crime can start small, i.e. hobnobbing at a WeWork happy hour.

Or, if they’re among a lucky group of elites, they can score an invite to the king of all M&A events: Allen & Co.’s Sun Valley retreat in Idaho. At this annual “summer camp for billionaires,” you can roast marshmallows with Zuckerberg and chat with Bill Gates about his quest for the perfect toilet. Don’t let the extracurriculars fool you, Sun Valley’s sprouted some of the biggest deals in history, including:

• Time Warner’s merger with AOL in 2000, which ended in divorce nine years later.
• Comcast’s 2011 merger with then-NBC Universal, which reportedly kicked off in 2009 somewhere around the ninth hole.
• Last summer's steamy camp romance was CBS and Viacom, which resulted in a completed deal in December.

Okay, maybe Sun Valley’s not a “traditional” route for dealmaking, but events, conferences, and networking sessions have incubated mergers for decades.

So have the suits. Most companies have business and corporate development leads with an eye on peers that could complement operations. And an entire investment banking industry is built around providing advisory services, especially for M&A.

• Investment bankers keep a pulse on the market, find and vet potential merger targets, conduct due diligence, and negotiate terms and deal execution.

Where these matchmaking options fall short: They rely on the right well-connected person at the right time. Many companies don’t have the internal resources to explore M&A opportunities; others know they want a deal but don’t know with whom.

Could there be an app for that?

Imagine if Hinge, Bumble Bizz, and Crunchbase had a baby, but their definition of DTR is negotiating a merger agreement. Some M&A advisory firms have created private deal networks that allow companies to start the merger journey online.

How it works: Fill out a basic company profile and then the network’s algorithms and/or a human matchmaker find other companies looking for something serious. Depending on the app of your choice, there may even be IRL events to facilitate meetups.

The perks?

• Access to a wider dating pool (by size and geography) and getting at-your-fingertips leads.
• Matchmakers can also help out with due diligence, record-keeping, and meeting scheduling.

Today, there’s no shortage of platforms for companies looking to give online merging a spin:

Axial is among the more prominent networks focused on middle-market companies with revenue between $5–$100 million. It uses algorithms to analyze company profiles and offer matches with potential transaction partners. If Company A is interested in Company B, it can send a SFW “teaser” to strike up the convo; if B responds, the NDAs come out and the deep convos begin.

• In 2018, Axial said it had facilitated 2.1 million deal connections, 2,000 transactions, and $25+ billion in deal value (not all of which were mergers).

Then there’s Aurigin (formerly BankerBay), which helps with deals between $5 million and $40 million. Instead of posting profiles directly, companies submit proposed deals to the platform, then Aurigin’s human analysts and machine learning algorithms vet proposals and find potential partners. It has helped household names like Kellogg’s, Philips, KPMG, Carlyle, and Singapore GIC sovereign wealth fund.

Best of the rest:

• Opportunity Network lets customers (including banks, financial firms, and even the London Stock Exchange) offer deal network access to their clients.
• Intralinks Holdings’s DealNexus and MergersClub offers free browsing but charges for additional services.
• SourceScrub, Sutton Place Strategies, DealSuite, and Navatar are all hard at work helping companies find their forever after.

Big picture: Many firms that end up merging will never go through a shopping period. But for those that do, these tech-enabled networks can make the process more efficient and straightforward.