Despite big strides being made in electronic completions during the Covid-19 pandemic, corporate transactions are a team effort that will always benefit from a personal touch.
When the UK went into its first nationwide lockdown on 23rd March 2020, the transaction process moved to the virtual worlds of Teams and Zoom, resulting in an overhaul to many of the long-established ways of working.
How has Covid-19 impacted on corporate transactions?
The day lockdown was announced, our Corporate team were able to immediately and efficiently transition to remote working, assuring there was no impact on any on-going activity. However, these types of deals often require the combined forces of different departments, and require travel to and from clients premises as well as the site visits and inspections necessitated by the due diligence process. Therefore, not being able to do these in the pre-pandemic way has presented new challenges for us to navigate to ensure the deals still cross the line.
As a team, we’ve had a successful year, despite the circumstances, and corporate deals have continued to complete throughout the pandemic, it’s just the way they’re completed that has changed. During the first lockdown, some deals fell through or were delayed but this seemed to have been the initial “knee-jerk” reaction to the crisis which has settled during the course of the pandemic when confidence resumed.
Has the move to virtual made completions more efficient?
Making the shift to virtual has both advantages and disadvantages. As there is less travel involved, particularly for client or all party meetings, you could argue a case for increased efficiency. However, a corporate deal is a team effort, it might be two or three members of the Corporate team with assistance from our Property, Employment, Intellectual Property or Commercial teams, and working from home rather than sharing that office space can be difficult, it isn’t as natural and easy to collaborate in the same way.
Travel is also required in many corporate transactions for various reasons, from property valuations and site visits to stock or plant inspections. This has all been made harder due to Covid-19 and therefore, has inevitably led to delays. Brexit is another factor that has of course impacted transactions, particularly where there is a cross-border element.
We’ve made enormous progress in a comparatively short space of time when it comes to getting documents signed remotely using the print and scan method or e-signing software.
Has there been an increase in corporate transactions during the Covid-19 pandemic?
We haven’t particularly seen an increase in transactional activity, more a continuation of our existing work. Throughout the year there has been talk of a recession in the fall out from Covid-19, which could lead to more ‘firesales’ if companies are struggling and a trade buyer spots an opportunity but as yet we have seen no real signs of this.
Is there anything business owners need to be aware of when contemplating buying or selling their business now that wasn’t a consideration before?
Furlough was a word not many of us had used at the start of 2020 but the Coronavirus Job Retention Scheme (CJRS) has become significant to the due diligence process since the pandemic. Businesses now looking to sell need to make sure they have complied with the rules when it comes to any members of staff they have placed on furlough leave.
Equally, there is new funding for businesses that wasn’t available before. Therefore, funders offering Coronavirus Business Interruption Scheme (CBILS) loans and the impact of associated security are significant to businesses looking to sell all or part of their undertaking. We have had a deal delayed as a direct result of new security binding all assets of a group – including those about to be disposed of!
Has Covid-19 changed the way corporate transactions will be completed moving forward?
We believe the progress made in the past year with regards working practices and attitudes is something that would have been years in the making if it weren’t for the pandemic and this is a real positive.
In many ways, this means we have moved on. For example, we have been using electronic data rooms for due diligence for many years and the move to electronic signatures and completions was the natural next step.
When it comes to meetings and completing more modest sized transaction, I think a lot of this will remain virtual as it’s more cost effective than previous ways of working and now difficult to justify the costs associated with travel. However, for larger transactions I think an in-person meeting may still be the preference – even for a world moving away from paper.
For me, a corporate transaction will always benefit from a personal touch, it is a huge team effort that requires long hours in the days and weeks leading to the completion. There is something fitting about having a drink with the clients and ‘other side’ following the completion of a transaction, I know this is something missed by many in our profession.