In the initial months of the COVID-19 pandemic, M&A activity, like the rest of the global economy, slowed down significantly and potential transactions were abandoned as business owners focused on managing their way through the crisis.
However, as lockdown restrictions started to ease and businesses began to look to the future, plans beyond the pandemic were considered once again.
As M&A advisers, we adopted new ways of instigating and progressing deals in an environment where meeting in person was restricted. Over the last nine months we have proved it is possible to complete deals almost solely in a virtual environment and, whilst there are both positives and negatives of this, there are efficiencies to be embraced for future deal processes.
Smith Cooper Corporate Finance has completed several M&A deals during the pandemic and we have learnt that planning and project management is more important than ever. In this article, we comment on two critical deal components which require adaption in a virtual environment.
M&A meetings in a virtual environment
In normal circumstances, face-to-face meetings were a requirement of a successful deal outcome. However, the past year has proved that it is possible to complete deals without ever meeting in real life, or where necessary, to complete most of the deal virtually, and then arrange a small number of physical meetings in the final stages.
However, it is not all plain sailing.
Broadly we have two types of meeting; those which are primarily process-oriented, and information based and then we have those which are negotiations and can involve elements of instinct, intuition, subjectivity, and sentiment.
The former type is well suited to virtual meetings and can make your process more efficient and save bags of time if managed correctly. These virtual meetings are often shorter, more collaborative and attendees are more focused on getting through the agenda. One caveat; the inefficiency of the meeting increases as the number of attendees grows as participants battle for their moment of ‘airtime’ – so be mindful of the size of your virtual meetings. Utilising breakout rooms on video conferencing software can help with this issue, allowing separate group discussions, before re-joining the main meeting.
The latter case are typically meetings which are intended to establish trust and rapport between parties where there is no prior relationship or debate sensitive topics. Examples would be introductory meetings, management presentations or negotiations – all of which are harder to conduct in a virtual environment. The nuances you would normally get in face-to-face interactions, such as the connection and chemistry between parties, are more difficult to monitor. For this reason, it is important to facilitate meetings effectively to encourage relationship building. This could be through including time at the beginning of a meeting for more casual, non-deal related conversation.
Virtual meetings cannot replace face to face meetings completely. M&A deals are often ‘once in a lifetime’ experiences and the requirement to get to know the person you are transacting with does, in the main, require face to face meetings.
As well as navigating virtual meetings, we can use technology to deliver information in new and more efficient ways.
We have used technology effectively to deliver regular deal updates during the process.
We also used pre-recorded videos as a supplement to management presentations so that time on real-time video calls could be focused on specific areas of interest rather than covering background matters.
Even prior to the COVID-19 pandemic, technology was becoming a catalyst in corporate finance transactions, with its role covering all stages of the deal process. The benefits of using technology include improving efficiencies, better (and real-time) collaboration and enhancing deal agility.
As we see more virtual deals take place, it is likely that the rise in technology usage becomes a more permanent feature, potentially leading to the whole deal process becoming shorter, as virtual meetings are easier to schedule, and allow for a more focused and collaborative environment.
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