B.I.G. Talks: looking at the world from a corporate investor’s perspective

In this series, we meet up with inspiring B.I.G. experts. They each have a distinct vision of what tomorrow’s (business) world could and should look like. Normally, they prefer to stay behind the scenes. But for B.I.G. Talks, it’s all cards on the table. Yannick Van Hoorickx sits down to talk about the world of Mergers & Acquisitions.

For those interested in mergers & acquisitions, these are interesting times to say the least. After years of steep increases in the amount of mergers and acquisition transactions, recent economic trends are changing the landscape of M&A. While digitization is increasing the speed of the process, higher interest rates could lower the appetite for risk compared to the last decade.

But there is much more to the story than just these trends. Yannick Van Hoorickx, M&A director at B.I.G., came to B.I.G. in 2021 after gaining experience, first in in consultancy and then in the mining industry, where he was focused on strategy and M&A. After working on translating our business strategy to an M&A strategy, he helped close the deal to bring Act Global into the B.I.G. family. “An acquisition that helps us gain access to a growing market in artificial sports grass, a new market in the US and relevant capabilities, thanks to Act Global’ s knowledge as a licensed NFL, FIFA, FIH and World Rugby supplier.”

The acquisition of Act Global stands out, but you don’t conclude a new deal every week in this line of work, do you?

Yannick Van Hoorickx: “The nature of the job is that you investigate a lot of opportunities, but only a very limited number reach the finish line. There are many variables to assess whether a potential transaction makes strategic and financial sense, and then you need to get to a point where all parties are happy with the deal’s terms, the timing, etc. But none of this time spent is lost, reflecting on potential acquisition targets helps us in refining and sharpening our long term strategy.

Over the last few years, the global market has been hit with many unforeseen circumstances. From pandemics to armed conflicts, our globalized economy has been left exposed a few times and many are calling for more localized efforts. Can we start talking about deglobalization?

Yannick Van Hoorickx: “I don’t think you can call it deglobalization, it is more of a slowdown. While globalization has contributed greatly to economic growth since the turn of the century, the interconnectedness of a global economy also gave rise to systemic risks, where events in one place have a ripple effect across the globe. The recent and rapid succession of these crises, have made companies think about how to become more resilient against external shocks. For certain industrial companies, that includes rethinking their supply chains and adapt the organization in such a way to quickly react and adapt to changing circumstances.”

Something B.I.G. has always had a strong position in.

Yannick Van Hoorickx: “Indeed, our vertical integration has helped us in facing the supply chain crises, allowing us to offer security of supply in certain markets where our competitors couldn’t. Looking at the future, vertical integration is not necessarily something you need to strive for in every market. It’s important to do a ‘make-or-buy’ analysis in your value chain and see what you have to do inhouse and what you should outsource based on price, quality, supply risk etc.”

With different protectionist rules and regulations being introduced in many parts of the world, how difficult is it to operate a global business today ?

Yannick Van Hoorickx: This indeed adds an additional layer of complexity for global companies who need to navigate the different regulatory evolutions besides managing the obvious cultural challenges. It is clear that a strong local implementation in your target markets is important as you can offer improved customer services and be very reactive on market movements. If you add the tendency of local governments incentivizing local production, we could indeed see a trend of industrial companies onshoring their production to regions where they have a relevant market but lack production capabilities.

The age of near zero interest rates is behind us, changing the landscape for private equity, venture capital and investing in general. What impact do you think the rising interest rates will have over the coming years?

Yannick Van Hoorickx: Increasing interest rates will put pressure on companies that are highly leveraged. Some companies will run into difficulties and look to carve out non-core activities, which offers M&A opportunities to healthy companies. From a buy-side perspective, there is still a lot of capital in private equity, so I don’t foresee a major drop in activity there. Venture capital is another story, while there will still be a healthy amount of start-ups seeing the light, financing conditions will be more tight, and we could see start-ups turn more towards corporations for funding.

We can’t escape it; artificial intelligence is everywhere, even where you least expect it. How will AI influence the world of M&A?

Yannick Van Hoorickx: “I see the implementation of AI in what we do in three stages. Right now, AI is already starting to help companies identify targets and match buyers and sellers. While AI still needs to improve, they could take over the job of traditional intermediaries.

“Next, we will see AI being deployed in the due diligence phase, to vet potential targets, and in drafting of legal documentation. Today this requires a lot of resources assessing large amounts of data which are often checked against standard checklists or templates, AI typically can automatize and speed up these types of processes. In a third stage, AI could help us define a M&A strategy by analyzing data about our company, the market, competitors and potential targets. It could inform us of the best possible direction to pursue based on our capabilities and investment criteria.

Like many companies, our purpose is heavily centered around sustainability. How important is it to match this story with possible additions to our group?

Yannick Van Hoorickx: “Finding the right fit is the most important part of a transaction. That’s why we spend time talking to the target’s management and shareholders to make sure they share our vision of shaping sustainable living. This is not only important for us as a buyer, many founding shareholders are looking for a buyer that has the same mindset. That’s where our family values – taking care of our people and those around us – gives us an edge. A seller knows that their company’s legacy will be carried into the future.”

And it’s not just about adding new parts to a group, acquisitions can also help to reach sustainability goals.

Yannick Van Hoorickx: “Climate Tech is gaining a lot of traction, with a lot of public and private actors creating new funds to finance startups in this space. Companies like ours can be valuable partners to these startups, not only to provide funding , but also to give access to our operational knowhow and market access to scale their business. We, in turn, can leverage a start-up’s technological capabilities and agility to accelerate our sustainability and innovation journey.”