COVID restrictions are not an obstacle to M&A
Building trust and solid relationships, organising meetings, face-to-face meetings and even something as seemingly obvious as a handshake are essential components of closing an M&A deal, from the negotiation of a potential collaboration to the final step of the transaction - the closing of the contract. This has been the case until the changes brought about by the Covid pandemic, both in everyday life and in the business environment. How the changes affect the structure of M&A transactions, what will be the future cooperation between the Buyer and the Seller, will everything return to the way it was after Covid, or will the new trends remain relevant in the future, we will be able to observe in the near future - comments Mārtiņš Bluķis, Partner at Auctus Capital.
While most would certainly cite the negative consequences of change, despite a number of constraints that at first glance might seem like obstacles to business development, entrepreneurs are finding new solutions, adapting to the circumstances and creating trust-building relationships even remotely. The fact that face-to-face meetings, negotiations and meetings can already be seen as an extra and something out of the ordinary, remote deal-making has become a natural step in the Baltic region as well. The positive benefits are time savings and the ability to control the process at any time and in any place. This makes it easier to move the transaction more quickly towards closing.
On 1 February this year, a sale and purchase transaction was concluded, which was carried out entirely by remote communication between IRVE SIA and ELIS Tekstila Serviss AS, in which AUCTUS CAPITAL represented the shareholders of IRVE on the Selling Party. IRVE's part of the core service block - the workwear rental business - was sold, with the buyer ELIS taking ownership of the workwear rental service and the production facility in Salaspils. The transaction was completed with the sole involvement of a professional M&A and fund raising advisory firm, representing the Selling Party, in order to ensure that the Selling Party received the highest possible sale price on the market, and that the transaction was structured correctly to mitigate the cash risks for the Selling Party. The negotiations between IRVE representatives in RIGA and ELIS representatives in France were conducted remotely at a time when travel was limited.
All relevant communication of the transaction process took place without the presence of the meeting. Presentations, negotiations, virtual data room, due diligence, contract negotiation and the signing of the deal (deal signign), which is often marked with a glass of champagne, took place this time with each person signing the documents at their workplace and couriers providing the exchange.
M&A transactions conducted remotely have become the new normal and it is safe to say that remote deal making will remain an industry practice in the future after COVID restrictions are relaxed.