Global Dealmakers 2021: Dealmakers focus on recipe for fast-growing companies
The recipe for fast-growing companies has long relied on a mix of ingredients — geographic expansion, for example, coupled with operational improvements and new management. But for investors and dealmakers looking to spur companies on to growth in the rocky recovery from COVID-19, there’s one ingredient that matters more than all others: digital transformation.
That’s the finding of Baker Tilly’s latest Dealmakers 2021 report, Scale and speed: Fast-growing companies defy their limits, which looks at the drivers for private equity investors in their choice of companies expected to grow. The report finds that after a year in which traditional markets and business models were tested like never before, the value of digital transformation has become clear. he ability to automate some work, use distributed workplace models to accommodate remote operations, better capture and convert leads, and engage in online commerce or transactions, have all been differentiators for business performance in 2020 and 2021.
While digital transformations will drive the growth engine, it is not the only tactic dealmakers are seeking to employ. The need to operate at scale is also a key trend in the report, with 87% of PE firms looking to increase their use of alliances and joint ventures to expand and grow. M&A is also an important part of the agenda for the next two years, with two-thirds looking to use acquisitions to fuel expansion.
After a punishing year in 2020, North America has surged out of the worst of the pandemic as a key location for dealmakers looking to pick up fast-growth assets. About one in three dealmakers report their most recent deal was in the territory, but 80% see it as a location for future opportunities. Western Europe is another hotspot for growth, 75% eyeing it for the near future, with optimism there underpinned by a largely successful roll-out of vaccines and the opportunities offered by two trillion Euros in recovery funding. Despite the interest in different markets, dealmakers were realistic about ongoing limits on free travel and the pace at which COVID continued to reshape economies.