Over half the deals in the next 3 months will be hosted virtually according to 79% of the respondents in DFIN’s DealMaker Meter Survey. Peter McMillan, Head of Sales for APAC at DFIN speaks of the advantages of virtual dealmaking as well as the pitfalls to be avoided, in an exclusive interview with DealStreetAsia.
Could you give us an overview into the post-pandemic evolution in virtual dealmaking?
There was an initial slowdown as the industry tried to overcome the considerable obstacles that the pandemic presented. To resolve this challenge, the market embraced technology and digital tools. The resulting activity has shown that dealmaking via digital platforms is sustainable. It drives productivity and increases the speed in which deals are completed. Looking ahead, dealmaking is expected to become more digitised. Remote deals are here to stay.
But at the same time, we also see more of our clients seeking to travel in the next 3-6 months. Since the onset of the “new normal”, our clients have indicated that deal volume has increased. They expect continuing activity and acceleration in overall deal momentum.
According to our research, Q2 2021 was the strongest quarter for IPOs globally in over two decades in terms of both deal count and proceeds.
While initially driven by necessity, what are some of the notable advantages of virtual dealmaking?
According to DFIN’s DealMaker Meter Survey (Summer 2021), 79% of respondents expect more than half of the deals over the next 3 months to be hosted virtually. While cost savings is a contributing factor, reduced travel and stayovers also significantly drive productivity. Our clients can execute more deals with the support of the right technology and partners.
This largely virtual environment has increased the number of ideas that PE/VCs can hear each day, creating excellent opportunities for active investors to find quality investments.
What are the hallmarks of great virtual dealmaking? What does it involve in terms of mindset, collaboration and of course technology?
Initially, many of our clients struggled to alter their work practices. This severely hampered their ability to complete deals in a remote working environment. However, once we worked with them and understood their concerns, we could tailor the experience to match their requirements. This enabled them to adapt their workflow to execute deals virtually. They continued to unearth further benefits from operating digitally, with premium 24/7 support to guide them through any challenges that they encountered along the way.
One of the key components helping this shift is the ability to collaborate online in multiple different formats that suit the individual. This makes the process smooth and efficient, catering to the rapid changes that occur during the course of a deal.
For technology to facilitate this shift, it is more important than ever to establish a user-friendly work environment, provide access to cost efficient and reliable solutions, and to ensure data privacy and secure storage of information throughout and beyond the deal cycle.
How is technology enabling some of the softer, more personal aspects of dealmaking in a virtual environment?
The increased ability to schedule meetings or working sessions with management, investors, buyers, and/or advisors is actually offering more opportunities to communicate and interact.
Additionally, offering multiple channels for engagement lets each individual collaborate in the way that suits them best. In an era of virtual dealmaking and remote due diligence, stakeholders tend to be more transparent. This is important to getting deals completed and in fact contributes to increased speed and efficiency
How can virtual dealmaking specifically foster a collaborative teamwork driven environment?
Deal teams can take advantage of solutions with the right technology and workflows built-in. Powerful features make the work environment always on and ready for our clients. These include role/permission-based access, scheduled reporting, guided workflows, automated risk screening among many other capabilities; and providing 100% cloud-based platforms.
While there is a fair degree of anxiety around cybersecurity, what are some of the best practices when it comes to minimising risks?
Implementing industry-grade encryption, ensuring data privacy and security across all deal documents will be essential. Additionally, having Multi Factor Authentication (MFA), disaster recovery and regular penetration tests on your systems can bring peace of mind to teams that work remotely.
Besides external threats, what have been some of the common pitfalls in virtual dealmaking? What typically causes them to happen and how are they best avoided?
Many of the pitfalls are situations that can be resolved very easily. I will discuss three of the most regular ones we encounter:
The first is training — platforms are in general extremely intuitive. But there are many new features and capabilities that can assist deal makers to drive work efficiency. At DFIN, our Project Teams work as an extension of our client’s deal teams to ensure everyone is trained by experts, allowing them to confidently navigate the systems to extract what they need, when they need it
Second – AI tools are incredibly powerful, but need to be trained effectively to produce the best possible results. We suggest that clients put in the time to build this foundation and they will reap unbelievable rewards in the future.
Third – Make sure your platform of choice has the right level of support to guide you through the full deal process. Being able to resolve any situation that you encounter is a critical element to ensure success
How does AI help speed up the dealmaking process while making it more accurate and reducing risks?
The use of AI in deals has become mainstream. Many AI-powered tools are readily available in the market and designed to complement and augment human capabilities. Deal teams must take advantage of AI to remain competitive and efficient. The ability to leverage AI boosts productivity, reduces human errors and mitigates risks.
DFIN’s clients can readily access our systematically burned-in AI features such as automated PII redaction and automated data privacy scans which can support them to meet GDPR/CCPA compliance requirements. Our clients also benefit from having AI by their side throughout the deal process. DFIN’s solutions offer pre-trained AI provisions on both the buy and sell side, helping deal makers easily execute projects 30%-90% faster, and with higher accuracy. Many of our clients have automated their contract review processes and preparation of disclosure statements for sell side transactions, just to name a few examples.
This article was created in partnership with DFIN.