The COVID-19 pandemic has accelerated the use of technology and the move towards virtual completions in M&A transactions.
With the right preparation and resources, working through a completely virtual completion can be just as smooth as a physical one and can help mitigate any unnecessary delay in the final stages of your transaction.
In this article, we set out five tips for ensuring a pain-free virtual completion.
Businesses are adapting to the new virtual working environment, much like how the business and share sale process has evolved to suit the changing conditions. Establishing clear parameters from the outset, including the form in which the transaction will take, what technology will be used and having an agreed back-up plan, will assist in ensuring all parties are on the same page as you work towards a virtual (rather than physical) completion.
Given the changing business environment, buyers are generally looking to finalise transactions in a much shorter timeframe than before.
We are increasingly seeing transactions with simultaneous signing and completion as neither party wants to take the risk of changing restrictions during a completion period. Getting ahead of the game by sharing documents with the counterparty as soon as possible, even if these are to be held in escrow (meaning to be held in custody until released), will put you in a strong position to complete the transaction by the intended completion date. This will also provide you with time to roll out documents in their agreed form ahead of completion, ultimately mitigating any unnecessary delay.
Preparing at an early stage will ensure that both parties are in the best position to provide and receive feedback as far in advance of the deadline as possible, alleviating any last-minute scramble by ensuring all documents are in the agreed form and signed correctly.
With international and state borders closed, we are seeing more and more parties and their representatives dispersed around Australia and the world. Therefore, it is important to consider the various time zones that all interested parties operate in to ensure a smooth completion.
Utilising an organisational tool, such as Google Calendar, can be of significant value when coordinating deadlines between parties across multiple time zones. These tools allow you to set your own time zone and save the time zones of other parties so that you can coordinate readily and easily between them.
It is worth considering the various tools and mechanisms available to assist you and the counterparty in the lead-up to completion. A virtual checklist, for example, is a simple but effective way of structuring the transaction process, outlining the responsibilities of each party and allowing tasks to be completed methodically and in a time-sensitive manner. It can also double as an organisational tool for resource management, managing the workload of each team member by assigning tasks to particular individuals.
No matter how meticulous the preparation has been, all parties to the transaction should be on standby and available with the relevant technology at the scheduled time of completion. Parties may no longer be in a position to sign (or re-sign, if required) documents in person or otherwise provide final instructions at their adviser’s offices.
If a signature has been missed or a last-minute issue needs to be resolved, having all parties (and their advisers) available to jump on a Zoom and e-sign documents can help prevent a transaction from falling over at the last hurdle.
With the right preparation and organisational tools put into place, the daunting completion process can be made as smooth as possible.
Authors: William Kontaxis, Amy Pun & Shenaye Ralphs
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.