Partnerships / Acquisitions

Corporate Buyers Take On COVID World With Pandemic Technology

How do finance executives perform due diligence, much less kick the tires, in order to buy another company — in the middle of a raging pandemic?

It seems necessity is the mother of invention. Third-quarter mergers and acquisitions reportedly rang up $1 trillion worth of deals globally.

The secret to success, The Wall Street Journal reported, is that finance execs got used to signing deals with people they may never even meet. To pull that off, they have had to use the tools of the pandemic, such as Webex, Microsoft Teams and Zoom.

Executives have even done factory tours via video calls. While that may be extreme, execs are actually gaining better access to a target company’s books.

“I felt like I lived on Zoom,” said Kevin Mehring, president and chief executive of UAS Laboratories, told the Journal, regarding the weeks before his company was acquired in a $530 million deal this summer.

The acquiring company, Denmark-based Chr. Hansen, said it relied on video presentations and walk-through meetings in the run-up to the acquisition. However, the food-centered ingredient manufacturer did have some of its U.S.-based employees check out UAS Laboratories’ facilities in person.

“They sent in two people to confirm that there is a plant at this address,” Mehring said.

But it could be an uncomfortable process. “Before this, [we had] never bought a company without meeting the management first,” said Jesper Mathiasen, then head of corporate development and mergers and acquisitions at Chr. Hansen.

The new strains on corporate buyers, due to the COVID-19 pandemic and its resulting economic downturn, could persuade them to more quickly replace manual accounts payable processes with digital ones. It has encouraged corporate buyers to adopt cloud-based systems and artificial intelligence (AI)-powered AP automations.

The result of automation is that chief financial officers and corporate treasurers have more data available to them for clearer, real-time visibility into cash positions.

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