As the world adjusts to the ‘COVID-19 new normal’, where face to face meetings are sparse, questions have been raised in the context of due diligence in M&A transactions and investments, whether some (or all) of these changes should be adopted indefinitely.
It has long been the case that site visits, physical inspections and management meetings have been carried out in person by buyers or investors, often involving hours of travel and associated expense. Given the global lockdown restrictions, this has not been possible for those deals still taking place. Instead, innovative solutions have had to be implemented, from hard hat video cameras being used for site inspections to team zoom calls.
The positives associated with these measures are clear, as more time and cost efficient due diligence can be carried out without the need for expensive and time consuming travel.
But does this virtual review work in every situation? Many investors and buyers have said that face to face meetings can be very important. It is often felt that to get a measure of the management team involved, to assess how successful the transaction will be and to ensure trust and relationship building, a face to face meeting is needed.
So, is this the end of face to face due diligence? It would seem that there is likely to be a step change, particularly in terms of an increased use of video conferencing, but there may still be circumstances where face to face is still valued above all.
Written by Rebecca Brown.
“Investing takes trust, so if you don’t go meet someone in person it’s hard to get a sense of them,”