dMACQ: Using technology to institutionalize the mergers and acquisition process
Imagine you are a company looking for funding or an acquisition. You have just signed a term sheet and suddenly instead of dealing with your perfectly in-sync team, you are now having to 'close the deal' with multiple parties. You could be any of the parties in that transaction, the company, a VC, legal or accounting advisor, the nightmare of several back and forth is what you sign up for, with every term sheet.
Is there a way to bring order in this chaos? Srikant Krishnan and Dr. Narayan's dMACQ, a software system, enables you to institutionalize the entire deal process. Srikant is a chartered accountant by profession with global experience in the field of mergers and acquisitions and Dr. Narayanan, with his doctorate in computer science from University of Texas leads the technology side of the startup. We caught up with Srikant to understand how dMACQ works.
It was back in 2006-07 when the thought of creating a tech based platform, completely customizable and consolidating all tools in one place, first came to Srikant. The duo started work in 2009, with the initial development outsourced. It took them three years of research and development to finally launch the product in March 2013.
The idea of dMACQ is to address basic issues of:
- An unstructured process, mainly due to deal specifics with other contributing factors like multiple party inputs.
- Transparency and governance issues, which often crop up retrospectively, when tracking decisions between the business team and various advisors on a deal becomes impossible.
A common platform to record all details and work collaboratively on the deal could potentially eliminate chaos, both while working on the transaction and at a later date.
How does it work?
dMACQ is an open source architecture, with very little maintenance and available on all platforms. While the software is available on both browser and cloud, Srikant says, confidentiality issues bring a few extra votes to the browser version. Here are some of its key features:
- automation of all processes starting with deal pipeline management to closing of a deal and post acquisition/merger integration
- collaboration tools which links functionalities like emails, calendar, chats and notes within dMACQ and an interactive dashboard for collaborative work
- powerful document management system including exporting them to formats such as spreadsheet, word document, pdf, etc and a comprehensive library of best-practice tools.
- deal process controller to ensure responsibilities and accountabilities are clearly laid down
- complete audit trail enabled and valuation tracking module
- dMACQ also provides infrastructure services to smaller companies to install and maintain the product.
Since the launch, the company has given demo of the product to corporates in India like the Tatas and the Mahindras and few companies in the US and Singapore. Srikant says their potential clients could range from corporates to private equity players to professional like lawyers, accountants and investment bankers. “We also see a huge potential in the healthcare and infrastructure sector, which we will focus on in time”, he elaborates.
Their pricing model depend on the various packages they offer from unlimited usage to usage bound by time and number of people. The team is hoping to close a few deals by end of June and expect to start monetizing the business (bootstrapped so far) soon after.
While the product has been met with some skepticism of its usability in all markets, Srikant is confident about the product. “Mature markets like London, US, Singapore and HK are definitely more ready for the product like this. But even with India, we feel its only about people realizing its functionality and user friendly interface”, he says.
While getting the industry to adopting a tech platform, where everything has to be done within the platform definitely seems the biggest hurdle for dMACQ, Srikant insists that they see clients using the product, to start with, for at least a few big deals, adding that ‘the benefit of the tool remains unparalleled even for smaller transaction’.
The company is looking for funding to the tune of a million dollar in the next few months, to grow internationally and particularly to be able to provide tech and infrastructure support for the product internationally. “Ours is a first-of-its-kind, integrated product in the market and we have a heads up of 18-24 months before another player crops up in this market”, concludes Srikant.