Due Diligence during Covid-19

This topic contains 13 replies, has 13 voices, and was last updated by  Yoke Chang Tan 9 months ago.

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    How do you think we should do DD during pandemic is it VDR enough ?




    Does your question mean that the DD process without a Face to Face meeting is valid and reliable?


    Yes is virtual not face to face


    Wei Zhong Ong

    I think the quality of due diligence during this COVID19 crisis can still be maintained even without physical face-to-face meetings. Although not as ideal, we can still conduct virtual meetings and tours of the company’s facilities if it were a potential acquisition target for the M&A. We can also make use of other online sources to perform background checks of the target etc.



    I think that the amount of virtual versus in person DD could depend on the type of business. For example, in acquiring a manufacturing entity, you would want to see the condition of machinery and equipment as well as the general flow of materials through the manufacturing facility. Less in person would be needed in a entity that may not have much in the way of “hard assets”.



    I am a firm believer that face-to-face is far superior to virtual. However, in this environment we don’t have any choice. At lease we have the virtual option. If this pandemic had happened even 20 years ago, this would have been very different.



    In my opinion, COVID has helped make the DD process go fully digital! And I think that’s okay (even though I personally love in-person communication, collaboration, etc.).



    I agree that COVID has helped us all to discover the potential of digital meetings and has learned us to focus on the essential in a DD.


    Beckie Callahan

    I agree that the due diligence process will differ depending on industries quite a bit and the purpose of the M&A transaction should also be considered. For example, if a technology company is purely interested in specific patents, trademarks or an individual’s subject matter expertise, then a virtual due diligence may actually be sufficient. If physical assets are involved, a virtual walk-through may be subjectively showing the best aspects, and additional risk increases when certain information realized post-transaction. The number of locations and employees may also vary. Smaller asset purchases or companies might be able to wing it easily with only virtual meetings and shared data. I’m glad that virtual aspects have evolved and become more acceptable to save time and travel though.


    Poon Henry

    During covid, many companies are running of cash. Distressed M&A became more frequent. The dd process needs to accelerate in a distressed m&a situation.


    Clifford Newton

    Although an opportune moment to pickup deals, the face to face interaction with employees and owners is a critical component of any DD. If face to face is not possible, then I would not be happy to engage in any merger activity.



    From an advisor side I believe it is acceptable, and that with different approaches it is possible to leverage technology to replicate a similar result. If I were a buyer in a transaction that was going to bring across people/ talent/ key performers, I may be more hesitant to sign without having met face to face, given that cultural clash is such a significant underlying reason for failed mergers. This may be even more important in higher context cultures where communication is more nuanced.

    I agree with other comments above that in some transactions the value being acquired is very tangible or quantifiable and in such a situation virtual DD is just as acceptable.


    Terry Koh

    I believe that the way things are functioning are always evolving and this includes the use of virtual meetings. While it is true that face to face is important, virtual meetings can allow people to save time and work more efficiently. As long as there are ways to verify due diligence with the use of virtual meetings, I feel that it is actually better.


    Yoke Chang Tan

    I feel that due diligence should have a mixture of both physical and digital aspect. I would personally find it difficult to conduct a full (online) DD in trying to acquire a factory / company with physical assets. How about post merger integration aspect? Can you identify those cultural differences over Zoom? I think it is tough.

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