Non-essential business travel
Management presentations play a vital role in the M&A process; they create an opportunity for bidders to get under the hood of companies and provide insights into the management team, cultural fit and compatibility. These F2F meetings typically take place in the run up to confirmatory offers at which point the number of bidding parties is sufficiently reduced to allow small groups the opportunity to have a detailed discussion with the management team (and shareholders).
In pharma carve-out transactions where the underlying ‘asset’ is often a manufacturing facility, management presentations are combined with site visits. These are an imperative part of the due diligence process, as they give the bidders the chance to bring reality to what has been presented in marketing materials and to pick-up upon points which may not have been evident otherwise (e.g. quality standards, environmental issues, health and safety).
In today’s environment these meetings and visits are being viewed by many as non-essential business travel as in some cases they can be conducted in a virtual manner. The impact is that it is beginning to create a bottleneck in processes particularly those which are at a critical stage where there is a need to inspect the ‘assets’ to be able to narrow valuation. Even past the lifting of travel restrictions which we see as being gradual, there will continue to be anxiety for people to travel. We therefore envisage companies exploring virtual options of which there are limited precedents.
Virtual visits are unlikely to fully replace the benefits of meetings in person however they are likely to become increasingly used in the future. They will have the benefit of savings in travel costs and where there is an importance in confidentiality, virtual options will provide the sellers with the flexibility to increase party size without increasing risk of breaching safety and confidential issues.
Keep the teams limited on both sides: avoid temptation to invite a larger audience. These meetings are meant to be confidential and focused discussion
Encourage parties to test technology beforehand: provide call-in details well in advance and encourage the receiving party to test the call beforehand to identify technology issues
There are currently several different routes that can be taken for site visits. The option used should be determined on a case basis, however simple and low tech technologies have the advantage that they are practical and cost effective for all parties and also will allow for a level of interactivity which may be absent in other options: