From Goldman Sachs to BNP Paribas, many transactions were concluded via Zoom, sometimes with the support of new assistants, the drones, due to the health crisis. Practices which are destined to continue but which also have their limits.
On Wall Street, London and Paris, drones have saved, with Zoom and Webex, a large part of 2020 from “deal makers”. Billions of dollars in mergers and acquisitions have been signed through screens because of the lockdown. But the investment bankers of Goldman Sachs or BNP Paribas have also had to turn to rental companies of remote-controlled planes to show the assets for sale remotely.
“We have sold assets all over the world using drones to fly over and view the sites, welcomes Stephan Feldgoise, co-head of mergers and acquisitions at Goldman Sachs. VSThis will change the M&A environment for a long time to come. “
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In six months, since April, the American firm has concluded two-thirds of a hundred sales mandates in the world in virtual mode, or several hundreds of billions of dollars in transactions. A modus operandi that has become the “new normal” for the world number one in M & A, from the pre-recording of presentation of the management teams open on questions and answers in video to the negotiation and the complete execution, including a filmed visit. of the site.
The “new normal”
“We had to adapt very quickly when we started the second quarter, explain Anne Bizien and Jérémie Marrache, co-heads of M & A in France at Goldman Sachs. For factory visits, we have deployed several formats, for example by video sessions pre-recorded by drone. ” For groups of around ten establishments in different countries, these are then presented by an entity manager.
For Goldman Sachs Bankers, these technologies have facilitated interactions with management teams, accelerated processes and further guaranteed the confidentiality of deals. So, “They will undeniably last”. Not to mention the cost savings, which have reached more than half a million euros, appreciable for their customers. But these new methods also have constraints.
“The technological choice has been so critical in M & A this year that it has sometimes given rise to intense negotiations between seller and buyer”, Also supported Carsten Woehrn, Fund Manager for Europe, Middle East and Africa (EMEA) at JP Morgan, and Augustin d’Angerville, Head of M&A France. Some people feared that their counterpart would “phish” data or monitor it remotely. The debate was acute in industries like defense and tech, which wanted to impose their own interface and did not go through standard tools.
Fear of phishing
JP Morgan thus conducted a large series of negotiations entirely from a distance, including the merger between Telefonica and O2, and the takeover of Osisoft by Schneider Electric. Site visits were made by drones or using GoPro cameras. For the sale of Carlyle’s stake in PA Consulting, the bank organized for an American buyer a commented remote visit of the high-tech center of the company, with microphones pre-placed on the site and mobile cameras.
The two officials, however, point to certain limits of the virtual whole. “In some cases, buyers were not very convinced and might wonder if what they were shown on video was not truncated”, they say. Suddenly, the bank turned to trusted third parties, such as PWC, whose teams based in Poland traveled with high-resolution cameras that allowed buyers to make visits in augmented reality. From this video, it was possible to model the production flow of a given site.
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“This can be used during ‘due diligence’ to identify possible cost savings or reorganize production flows”, emphasizes Carsten Woehrn. But this option requires two to three months of preparation and is quite expensive. JP Morgan therefore offers its own drone assessment solution.
Direct contact remains essential
Another pitfall with the virtual: “Several times, we said to ourselves that the deal was dead. It was total silence, one of the main negotiators had fallen asleep… ”, tells Augustin d’Angerville. Conclusion, “We will try to keep the best, but the ‘body language’ and the direct contact, that remains crucial in the final phase”, he insists.
BNP Paribas makes the same observation. “Videoconferencing is very useful internally, because it helps put all players from different backgrounds on an equal footing, explains Bruno Villard, head of M & A in EMEA at the bank, which has also used drones and video. But the conviction of a management team cannot just go virtual, it is not enough in the decision-making process. “
Others are even more critical and reluctant: “All this is a lot of marketing, judges a banker of an American firm. This is not, in the end, what allows you to land targets and win a negotiation. “