Big growth in digital deals: Trend report 2021

Admincontrol is a leading provider of data rooms for due diligence. This means that we have firsthand experience with hundreds of due diligences processes every month. Coupled with statistics from our platform, this provides us valuable insights about what is going on in the market and what trends might dominate in the future.

In this blog post, I will share some of our most valuable insights from the first quarter of 2021, as well as our predictions for the next quarter.

Blog post by Mari Nygård, Head of Virtual Data Rooms at Admincontrol

Mari Nygård

Head of Data Rooms

+47 452 00 024

[email protected]

The digital deals are taking over

As we have learned to live with the pandemic, one of the major general trends has been accelerated digitalization. The deals market is no exception.

We launched our web shop in the beginning of 2020, making us the first data room provider to offer a fully automated purchasing process. This has been key to service our customers with instant delivery of data rooms on request at any time.

Accelerated by the pandemic, our customers have adopted the web shop quickly. In Q1 2020, only 3 % of our sales were through the web shop, but within a year the growth has been substantial and digital sales now accounts close to 20 % of total sales.

Covid-19 has been a “game-changer” that has pushed forward the digitalization of the due diligence process.

As a consequence of this, we see that our customers are embracing the solutions we offer that support conducting a fully digital due diligence, like:

We expect that this digitization will continue to accelerate and will focus on delivering solutions to support this need for our customers. We have a lot of exciting plans up our sleeves.

Soaring activity levels

In addition to the growth in digital deals, Q1 2021 has sustained the positive trend from second half of 2020, with high activity levels and a high number of processes have been initiated.

Illustration: New VDRs opened per month

Almost half of the data rooms that we initiated in 2020 are now being prepared for due diligence, and we expect many of these to go live and invite counterparties in during the next months.

The illustration below shows the industry break down of new portals opened during Q1 2021. The chart includes data where the industry can be derived, which includes about two thirds of the data set.

Illustration: Industry breakdown of data rooms opened in Q1 2021

High activity in three specific sectors

The breakdown shows that the new wave of deals is driven by high activity in a broad number of sectors but with especially high activity levels within TMT, real estate, and energy.

As for future trends, we have identified three sector specific trends that we believe also will dominate going forward.

Three dominating sector specific trends we belive will dominate in the future:

1: Future proof tech

Tech companies with a business model that supports the accelerated digitalization have gained an even larger advantage than prior to the pandemic.

“Everyone” wants to invest in tech now, and we continued to see many tech deals in Q1, a trend which we do not expect to fade any time soon.

Since the pandemic started, we have seen exceptionally high activity levels among companies that already had a future proof business model. A typical example are online retailers and home delivery services. Fast-tracked by the pandemic, these companies have been able to scale at an unexpected speed. We have seen series of fundraisings initiated to support this growth.

Fast-tracked by the pandemic, online retailers and home delivery services have been able to scale at an unexpected speed

2: Life science

Life science companies in many different sub-sectors from vaccine development to healthcare technologies are more attractive than ever. We see a surge in deal activity from life science companies from early-stage funding to IPOs.

3: Hot energy market

The energy market is hotter than ever. In many of our core markets we see that this is further enhanced by developments and changes in policies.

The ongoing green shift from oil and fossil energy towards clean energy is making its mark on the deal market as well. Especially when it comes to wind farms.

 The renewable energy market is in for a strong year

Will 2021 be the year of going public?

Regardless of industry segment, we also see one clear tendency when it comes to deal type. While there were few IPOs in 2020, the number of companies that have gone public have already been quite high during the first quarter of 2021. We also see an increasing number of portals used for planning an upcoming IPO. It will be interesting to see whether this is a trend that will continue throughout rest of this year.

Expectations for the rest of 2021

All the trends and tendencies that we have described in this blog post, points towards a year with continued high deal flows. This high activity level is partially made possible by the accelerated digitalization that helps dealmakers to act faster and more efficient than ever.

At Admincontrol, we will keep providing the ultimate solution for digital and smart deals, and I look forward to introducing even more features to support this mission during 2021.

Gids: De toekomst van due diligence

Zoals vele andere sectoren, moesten M&A teams en consultants een manier vinden om het due diligence proces te faciliteren in een wereld waar contact en reizen gelimiteerd is. Er is sindsdien veel geleerd.