Building a Winning M&A Engine with Technology
Our co-founder and co-CEO, Ruben Amar, shares his view on how technology enables his M&A team.
During my time as an investor at TA Associates, we lived by a three-word mantra, “Always Be Sourcing”. These three words were visibly placed on the desk of every analyst. They were the primary driver of our behavior and were our daily motivator as we prospected and sourced deals. This mantra permeated the culture at TA Associates. It led the firm to invest millions of dollars to meet thousands of companies each year, building the best pipeline of proprietary investment opportunities, giving TA Associates an undeniable edge over its competitors.
These three words still inspire me today, as our team at Forum Brands works to address a fundamental question. How can we systematically build a proprietary pipeline of qualified acquisition targets at scale and instantly connect with millions of entrepreneurs around the world? The answer to this question lies in data.
All along the value chain, from venture capital and private equity to investment banking and stock trading, sound investment decisions are driven by an investor’s ability to analyze data efficiently and effectively. By “efficiently”, we refer to the speed at which an investor can identify data sources (e.g., news articles, company filings, etc.), read the information, understand it, and then use the information to identify patterns and insights to make investment decisions. These investment decisions not only include how much to invest, but also whether or not to invest at all. By “effectiveness”, we mean the extent to which those investments pay off (not only by how much, but also over what time frame?).
Humans generate over 2 quintillion bytes of data every single day.No matter how efficient an investor is, it is impossible to read and understand all available information, especially in the private market where information is more difficult to find. But what if we could use Big Data techniques to predict success? This approach relies on building a robust predictive model that can gather a significant amount of usable data, apply statistical techniques to predict factors such as revenue, customer lifetime value, brand reach, and product quality. Finally, and more importantly, the model cannot work if investors do not have a normalized, principled approach to decision making.
At Forum, we also face the challenge of ingesting a significant amount of data and making smart, methodical investment decisions based on the results of our analysis. As of 2021, Amazon has more than six million third-party sellers on its platform. That is more than six million investment opportunities for Forum Brands; more than six million unique and interesting brands that global consumers know and love. It is an amazing opportunity, but we cannot capitalize on that opportunity without systems and technology to enable us. Since our inception, we have understood the importance of modern data technologies to improve our sourcing efficiency and build a differentiated, proprietary funnel of investment opportunities. This is increasingly important today, as competition for the most attractive ecommerce assets has increased. These technologies have allowed us to implement a tool to connect within 3-clicks to millions of entrepreneurs around the world, who share our passion to build the highest quality consumer products that meet every customer anywhere, anytime.