The M&A process during pandemic

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  • This topic has 13 replies, 14 voices, and was last updated 1 year, 4 months ago by R Ganes Ramalingam.
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  • #36259
    R Ganes Ramalingam
    Participant

    How is the M&A process being affected during this pandemic? Would it be all done virtually for cross boarder deals? Share me your thoughts, thank you.

    #38753

    In my opinion, the pandemic of COVID-19 improve the way that this have to be done. For exemplo, when the pandemic starts, I was in the middle of M&A process and I were worried about how the things would continue, the efficient of meetings, the complexity and variety of issues and problems that needed to solve and this like that. What I see in the months that follow was that the people was more available and efficient in theirs obligations and roles, and this improve substancialy the quality and time spent to do a diligence and discuss the share purchase agreement, without the necessity to travel to other cities to solve this things and of course save money too. And all this negociation with a cross boarder investor.

    #38771
    Patryk Kania
    Participant

    with the rise of virtual data rooms and immediate availability of DD committee members, this has not been a huge issue.

    #38831
    Raid Almutairi
    Participant

    In my opinion, Covid19 has affected M&A process timeline. especially the due diligence.

    Sites visit as part of the due diligence procedure has been largely affected due to travel constrains and requirements.

    Therefore, companies will need to show some flexibility in extending the due diligence schedule.

    Thanks

    #38846
    Sam Chee
    Participant

    I think the initial pandemic uncertainty in 2020 resulted in low business optimism and confidence, and thus reduced M&A activity. As the business adapted or pivoted during the pandemic, perhaps the stronger companies will see opportunity in acquiring undervalued targets that are not coping well during the pandemic but have upside potential post-pandemic (e.g., airlines, hotels, travel, medical tourism, etc.).

    #38850
    Kar Wee Pee
    Participant

    I believe the due diligence aspect will be impacted. As there is now a need to share sensitive information electronically, there is a higher risk of leakage. What could previously have been done in an in-person meeting would be to shovel everyone into the data room and not have any forms of media replicated in physical or electronic form to be brought out of the room. This is now a lot more difficult.

    I also find that interviews with the management gets a little harder as it isn’t as easy to gauge a person over a webcam.

    #38857
    Hanen Dada
    Participant

    I think this depends on the industry. I agree that it might affect the process negatively if the deal requires site visits for valuation and understanding the process. However, for target companies in which site visits are not needed or can be short due diligence can be done faster virtually.

    #38868
    Craig Hasler
    Participant

    Hi R Ganes,

    Thanks for the prompt… it is interesting to see the comments above.

    Based on my experience and interactions with others within both the private and public sector (target acquirers / investment bankers), I think those who are involved in the M&A world have adapted quite well to the pandemic conditions. Obviously there have been challenges without face-face meetings, but the reality is that with less people travelling, more people have been available for virtual calls and discussions (many working from home). In my industry (HVACR), overall M&A activity has actually increased from 2019-2021 by 2x which is not a function of the pandemic, but it does show that if there is shareholder value to be created, the pandemic situation will not prevent a deal from occurring. I understand the conditions can make it more challenging from a due-diligence perspective, but thorough research and discussions can help to alleviate any concerns.

    Craig

    #38880
    Abdoulhamid Diallo
    Participant

    Definitely COVID-19 has affected M&A processes. The due diligence process is requiring more time since companies have to rely on others to perform certain activities. Any review or face to face meetings are done virtually, which can potentially speed up the process.

    #38888
    Matthew Brown
    Participant

    It’s hard to substitute the in person experience. Developing and managing good relationships is important in successful integration. During COVID with travel constrained, it has been harder. Virtual has been okay, but not as effective. We did our first site visit recently and it was invaluable and we quickly realized how much more effective we would have been if we’d been able to get together in person.

    #38894
    OOI LENG TAY
    Participant

    Pandemic had really changed the ways we used to live. Digitalisation in many ways of our life has become a new norm. Majority of works of merger and acquisition nowadays can be done through virtually or digitally. It is a matter of adoption and i believe most of courts in the world have started recognizing digital evident in commercial transactions. The way we process transaction had also become more digitalised. There is a lot analysis tools in the market as well to help in merger and acquisition analysis. This is going to be the trend to be going forward.

    #38923
    Dmitry Govorov
    Participant

    I see the following affects on the M&A process during Pandemic:
    1. internal team coordination goes through the change of moving mostly to online
    2. meetings with business partners suffer from lack of the warmth of being close and have some “personal touch”, however it becomes easier to set video calls
    3. things tend to get lost easier “in translation”
    4. side visits more difficult
    5. selecting advisors more difficult

    #38929
    Teo Han Guan
    Participant

    I think it does have a strong impact in conducting the due diligence. Even though there are still a lot of business activities ongoing during this period, including my business segment which is very active and still managed to have business activities like, customer meeting virtually, contract negotiation, contract signing, and all can be done via conference call. But for M&A activities, it creates some frictions in identifying some critical information from the acquired entity, some interviews or information exchanged with the relevant party will also be constrained due to the travelling ban.

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