The advent of remote working has driven the adoption of new technologies across the board and M&A transactions are no exception.
This is one of the reasons for Bowmans' decision to adopt Legatics, a technology solution that facilitates remote dealmaking.
There are numerous other technology solutions to assist clients on the path to completing a transaction. This newsflash sets out the most valuable M&A-enabling technology (in our experience) and highlights some key learnings to assist our clients in the successful adoption of such technology.
Types of M&A-enabling technology
While new types of technology are continuously emerging and being trialled, the broad categories below are now firmly established and should be seriously considered:
- Data storage, collaboration and exchange sites: virtual data rooms have been essential for uploading and accessing due diligence documents for some time. Data rooms can be accessed from anywhere in the world at any time. Benefits include: managing privacy through redactions and clean team rooms; managing information requests; enabling teams to complete their reviews faster and at reduced costs; and providing a definitive record for disclosure purposes. In addition to data rooms, there is an increased use of collaboration sites to share documents securely. Such sites facilitate collaboration among closed groups, for example, to comment on draft agreements or share executed copies pending their wider release thereby reducing risks associated with version control and increasing efficiencies in deal flow.
- Data review tools: artificial intelligence software that uses machine-learning technology is particularly well-suited to due diligences, which often entail reviewing hundreds if not thousands of documents. By automating the extraction and analysis of key provisions in legal documents, the review process can be undertaken with increased accuracy and focus and potentially be completed in 20% to 40% less time. Bowmans uses Kira for this purpose.
- Transaction management platforms and eSignature: these platforms transform conventional transaction/closing checklists into smart portals that allow deals to be run efficiently and transparently. Parties and their advisors can access the portal to monitor and comment on different items in real time. The deal is progressed through uploading documents and commenting on tasks; streamlining the virtual signing process by making execution versions directly available to the targeted signatories for signing by eSignature; and creating transaction bibles at the click of a button. These platforms materially reduce the time invested in and risks associated with closing calls/meetings and manual version collation - making virtual signings and closings the new normal. Bowmans uses Legatics for this purpose.
- Document automation: these tools speed up the drafting process and reduce time, risk and legal costs. Such tools are effectively used to prepare non-bespoke ancillary or closing documents or to establish baseline precedents enabling lawyers to focus their time and energy on layering those precedents with client-centric sophisticated and contextual transaction mechanics.
- Remote meeting technology: while video conferencing platforms such as Teams and Zoom can substitute for face-to-face negotiation and signing meetings, a deal that requires shareholder approval (particularly where shares are widely held such as those of a listed company) require more thought before holding a virtual shareholding meeting. Service providers such as The Meeting Specialists, Computershare and Ince offer virtual meeting platforms that can help cater for this requirement and facilitate electronically-held meetings.
We have seen the greatest success in instances where the parties have taken the time up front to strategise around deal enabling technologies. This has, in our view, become an important step in the strategic planning for any M&A deal.
- Your objectives and needs should be the guiding principle when selecting the appropriate M&A legal technology tool: No two transactions are identical, and parties and their advisors need to consider the specific nature of a transaction as well as data protection and security considerations against some of the intrinsic limitations of automated systems. By keeping your needs and deal-specific considerations paramount, you can use the best-suited tool and avoid those that are either overly-complex or do not meet business needs.
- Integrate different, but complementary, tools to create the most efficient suite of technology for the deal: For example, for a remote signing, the eSignature tool and the transaction management tool should work well together. Similarly, the artificial intelligence review tool must be compatible with the virtual data room tool.
- Onboard legal technology at the earliest possible point in the deal: This can make for seamless adoption by the full deal team and avoid duplication and parallel work streams (freeing up the management team to focus on critical aspects of the deal). In addition, the sooner that technology can help identify risks, the greater the benefit to in getting the deal done.
- Onboard the deal team to be fully proficient when using legal technology: This is critical to capitalising on the technology's benefits. There is a tendency for teams to do what they did before a little faster rather than doing something completely differently, which is where the real magic lies.
There are material benefits to getting an M&A deal done using technology as a key facilitator. In the present environment of social distancing, some technologies, such as those enabling virtual shareholder meetings and certain remote signing and closing meetings, are essential to concluding deals.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.