Due Diligence during Covid – Face-to-face vs virtual

This topic contains 8 replies, has 9 voices, and was last updated by  Patryk Kania 1 month, 3 weeks ago.

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  • #118185

    Joselin
    Participant

    While a lot of due diligence requires objective information (e.g. documents, financial analyses etc), cultural/HR type of “soft” due diligence is important to in trying to suss out the potential challenges in these areas.

    Would you think Covid, and the limit on face-to-face interactions, have an adverse impact on the cultural due diligence aspect of things?
    While it is still possible to interact with people “face-to-face” via Zoom and other virtual channels, but there still seems to be a gap when you cannot meet people in-person.

    #118653

    Peter Sakaitis
    Participant

    I do think that face to face interactions and discussions do add the “human element” to a deal.
    We are in the process of assessing a target and have never stepped foot inside their facility. This pandemic certainly has remove some of the elements of a true DD

    #118738


    Participant

    I think that there is definitely an impact because face-to-face video calls can’t replace real life human interactions for 100%, building trustworthy relationships is more difficult this way.

    #119275

    Ceri Barton
    Participant

    I agree with previous comments on the negative impact of Covid on in person interactions and relationship building. I would add that Covid related travel restrictions have also hampered the ability to get a ‘feel’ for a target’s culture and working environment by visiting the offices/operating sites of key (non-executive) teams, having informal introductions and just observing the general atmosphere.

    #119352

    Samantha Maraj
    Participant

    I think that the lack of face-to-face meetings have definitely impacted the ability to properly understand certain aspects of a company’s operations, mainly its culture. The lack of in-person interaction and observaction, e.g. of team meetings and body language can certainly lead to the overlooking of pertinent information specifically for post merger integration.

    #119454

    VishnuVardhan A
    Participant

    DD is about assessing compliance weather its tax, legal, IPR, HR, or commercial.
    due diligence needs objectivity and rationale, while post merger integration needs all the human element it requires.
    “substance over form” not “form over substance”

    #119648

    William Venus
    Participant

    I agree the lack of face to face meetings has a definite impact on the ability to assess culture and talent. We are human at the end of the day and the ability to see an asset, its people and leadership operate day to day in person in different venue’s (in and outside the office) is tremendously valuable to the overall quantitative due diligence process.

    #119950

    Pawankumar Sharda
    Participant

    My experience is that Due Diligence before finalizing & announcing the deal is confidential and in most cases is done in a closed-door room. Frequent meetings beforehand with many employees/middle management may alarm the target company’s staff and may create an anxiety moment. So Virtual meetings & DD with the key personnel involved in the M&A work out best to avoid any presumed red flag among the employees. I agree, 100% of virtual meetings may not be as productive and build trust as they would have been in the case of in-person meetings.

    As far as Cultural/ HR Soft DD is concerned, most of the Cultural DD is post-integration/post public announcement of the deal. The acquirer should during HR audit very well understand the overall cultural key points of the target company. There may be few cultural challenges however that won’t be a make or break situation. The Acquirer may have to adopt some of the target practices or eventually change/modify its practice. Nothing 100% can be achieved even in face-to-face interactions. It’s an evolving process till both sides settle down.

    #120523

    Patryk Kania
    Participant

    We have had to do our DD part virtual part F2F. I must admit, some law and accounting firms had very strict rules and would not allow for F2F, which made it very difficult for us as the client to interact part F2F part virtual.

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