“The main purpose of the [Dealfox] platform is to ensure matchmaking… through its deal generator that uses an algorithm,” said Jean-François Marlière, head of M&A at Dealfox, a fintech firm headquartered in Luxembourg. By way of preselection of criteria, investors consult or automatically receive a list of deal offers that correspond to their interests.
Marlière explained that the idea started off at IsFin, an advisory consulting business focusing on emerging markets, also led by the CEO of Dealfox, Laurent Marlière. He observed that many deals were sleeping on the desk of lawyers. “Dealfox is a spinoff of the advisory business.” Deal sourcing is a core advantage of the platform given its access to a large number of advisors. According to Marlière, there are no economic nor legal ties between Dealfox and IsFin.
It is unlikely that they [advisors] will publish deals that will stain their reputation
Dealfox targets “non-listed off market deal” proposals presented by regulated professional or advisors, such as lawyers and certified accountants and auditors, on behalf on their clients, or sellers. Dealfox reaches out to advisors located in 75 countries, including in Asia and Africa but with an initial focus on French-speaking communities in Europe.
In everyone’s best interest
Given the proximity to their clients, these professionals are best placed to understand the deals presented to the platform. Dealfox takes comfort that these deals are prequalified as it has been doing business with those regulated professionals for more than 20 years at IsFin.
Therefore, “it is unlikely that they will publish deals that will stain their reputation,” said Marlière. In other words, Dealfox is confident that investors will find a trusted counterparty on the platform.
Moreover, Marlière thinks that Dealfox is strategically positioned to list attractively priced distressed assets. For instance, he thinks that the platform offers a window on the world for heirs that have inherited unwanted companies during the covid crisis.
The advantages for advisors are manifold. More deals may result into more work to take on from their clients and in some cases a success fee, should that be allowed by their deontology code.
Can anyone be an investor?
Dealfox does not rule out any investor. It goes from private banks, investment funds to individual business angels without predefined qualifications (no check other than IDs are requested by Dealfox). Moreover, investors take advantage of a pre-due diligence by qualified experts.
Marlière thinks that as the investor is the first to know, he or she may take advantage of a cheap price, without being exposed to bidding wars as observed on large platforms such as Pitchbook.
He commented that competitors such as Pitchbook and ARX cover all types of companies which are available to anyone and tend to focus on large deals--if not mega-deals--generally coming from listed companies. Those deals are generally worth north of €100m.
Deal transparency provided under certain conditions
Marlière said that the confidentiality of the platform is paramount for advisors and their clients (sellers). The advisor has the luxury of deciding the level of details that will be published on a deal over the platform. Once approached by an investor, the advisor decides whether the counterparty is acceptable before moving to the next step, which requires the electronic signature of both parties.
Once signed, the system triggers the automatic issuance of a non-disclosure agreement, after which the investor receives all the information about the transaction. Yet the deal will continue to be visible for other potential investors until it is removed from the platform by the advisor, which occurs generally after a commitment letter is signed by the parties.
Up and running
Despite being a startup, Dealfox has already around 16 deals on the platform. The minimum ticket size is €1m, whereas there is no upside limit. Three deals have been completed since the creation of the company in June 2023. Two transactions were worth between €15m and €20m whereas its largest deal struck on the platform was for €330m, for a palm oil manufacturing plant in based in Africa. Originally owned by a European individual, the plant found an African investor through the platform.
While the palm oil business is not seen as ESG-friendly, in general, Dealfox aims, down the road, to have ESG credentials and become compliant. Yet Marlière reiterated that Dealfox is a matchmaking platform that does not look at the details of the assets and does not know the name of the sellers.
Advisors and investors need to pay an annual membership to access the platform and their counterparties. Dealfox does not earn revenues from the transactions.
Dealfox initially raised €500,000 from venture capital investors and a second tranche is in the offing, while targeting the same investors and a family office from Dubai.
The platform was launched on 1 November at the International Bar Association conference in Paris, the largest event for lawyers in the world, according to Marlière.
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. .