Virtual M&A transactions and negotiations – a dream, nightmare or the next normal

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Sandeep Mehta
J Sagar Associates, Mumbai
sandeep.mehta@jsalaw.com

2nd IBA Virtual Entrepreneurship Conference: Innovation and entrepreneurship in the next normal

Tuesday 23 March 2021

Presented by the IBA Closely Held and Growing Business Enterprises Committee and the IBA Corporate and M&A Law Committee.

Session Co-Chairs

Marie Caroline Brasseur  ALTIUS, Brussels; Co-Chair, IBA Young Lawyers’ Committee
Iván Delgado  Pérez-Llorca, New York, Conference Quality Officer, IBA Closely Held and Growing Business Enterprises Committee

Moderators

Adriana Castro  BLP, San Jose; Co-Vice Chair, IBA Young Lawyers’ Committee
Robrecht Coppens  Loyens & Loeff, Brussels; Vice Chair, Western Regional Group, IBA European Regional Forum
Paulo Coelho da Rocha  Demarest, São Paulo; Assistant Outreach and Education Officer, IBA Law Firm Management Committee
Arthur Davis   Addisons, Sydney, New South Wales; Chair, Underwriting and Distribution Subcommittee, IBA Securities Law Committee
Pierre-Alexandre Degehet  Bonn Steichen & Partners, Luxembourg
Kosturi Ghosh  Trilegal, Bangalore; Vice Chair, Current Legal Developments Subcommittee, IBA Corporate and M&A Law Committee
Rasem Kamal & Associates  West Bank and Gaza; Officer, IBA Arab Regional Forum
Pavla Kopeckova Prikrylová  Peterka Partners, Prague
Oliver Künzler  Wenger Plattner, Küsnacht-Zurich ; Vice Chair, Communications Group, IBA European Regional Forum
Sandeep Mehta  J Sagar Associates, Mumbai
Andrea Metz  Luther, Frankfurt
Mariana Norton dos Reis  Cuatrecasas, Lisbon; Secretary, IBA Women Lawyers’ Interest Group
Federico Piano  Guyer & Regules, Montevideo
Richard Spink  Burges Salmon, Bristol
Cameron Taylor  Minter Ellison, Auckland; Vice Chair, IBA Closely Held and Growing Business Enterprises Committee
Luciana Tornovsky  Demarest Advogados, São Paulo; Secretary, IBA Closely Held and Growing Business Enterprises Committee
Gisèle Rosselle  Strelia, Brussels
Cornelia Topf  Gleiss Lutz, Frankfurt; European Regional Forum Liaison Officer, IBA Women Lawyers’ Interest Group
Erika Villarreal  Anzola Robles & Asociados, Panama City; Membership Officer, IBA Young Lawyers’ Committee
Helge-Torsten  Wöhlert Heuking Kühn Lüer Wojtek, Munich

During this session, the co-chairs gave introduction about the topic of virtual M&A transactions, negotiations to be discussed, and how travel restrictions are affecting M&A transactions.

Virtual transactions require very good IT infrastructure as a pre-requisite. The key questions are how we negotiate M&A transaction virtually and how does the closing of such transaction occur against physical negotiations and closing?

The moderators and participants discussed following:

1. The initial anxiety of working from home and how not being in the office raised questions about how M&A transactions would be managed if multiple people are involved from various jurisdictions. However, it became fairly easy to manage such M&A transactions. Now, the question is, why do we need big offices?
2. There are still certain internal challenges relating to staffing of M&A transactions, such as guidance and feedback to junior members; integration of new joiners in the team; failures due to technology not working; pressure on resources; burning out of lawyers due to mental pressure; people who are alone face problems; same with people having small children and so on
3. There are certain positives such as increased efficiency, less waste of time, easy to get people on call, people copying on different matters, home working creates comfort, and so on
4. Humans are social animals which has been proved time and again. When returning to the office, more social spaces to be created for people to socialise and meet. Offices should be redesigned for establishing cafes and socialising spaces. The assistance is required for solving mental issues due to remote working for lawyers staying alone and junior lawyers by setting up confidential helpline with a third party
5. We have been working virtually for too long: people are waiting to come back to the office to be in meeting rooms with colleagues and clients for executing M&A transactions. Lawyers are driven and lead by clients
6. It is easier to manage due diligences in M&A transactions, but negotiations have been tough, especially organising break out meetings between team members and with clients to resolve issues in the midst of lengthy and complex M&A transactions negotiation. It is difficult to execute complex M&A transactions virtually in addition, if the parties are from different time zones which can be easy to resolve in personal meetings. It is also difficult to pick up social nuisances of the issues involved which are easy to understand in physical meetings
7. Virtual M&A transactions increase misunderstanding between participants and trust factor has been reduced; it is difficult to understand client requirements
8. In virtual M&A transactions meetings, mobile sms, WhatsApp messaging and private calls are means of communications of passing of thoughts among members
9. Need to find a balance between what is essential and what is non-essential, things to do virtually and things to do physically, for M&A transactions

The session co-chairs unanimously concluded that while technology is working for M&A transactions, not being able to meet physically is unideal. This is the new normal and few things will stay forever. The investment in IT infrastructure is key for virtually executing and completing M&A transactions.

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