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The Fast Company Executive Board is a private, fee-based network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.

The pandemic changed M&A forever—and that’s a good thing

M&A is as much about the heart as it is about the mind.

The pandemic changed M&A forever—and that’s a good thing
[Andrey Popov/Adobe Stock]

I’ve been involved with M&A—both as an acquirer and acquiree—for more than 20 years. But going through an acquisition during a pandemic completely upended my expectations for the process.

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Travel restrictions and the transition to remote work forced me—and others in a similar situation—to reimagine the M&A playbook entirely. We couldn’t do an informal dinner to get to know the people (both personally and professionally) on the other side of the deal. We might not even be able to visit their offices for a product demo, much less gather stakeholders in a conference room together for hours to hammer out terms. Instead, we were forced to make do with messaging apps and Zoom breakout rooms.

Here’s the surprising thing: Taking the M&A process remote, or at least hybrid, had more positives than negatives. And as pandemic restrictions ease, I welcome the opportunity to take the best of both the physical and virtual worlds. Here’s what I learned about how to make a hybrid acquisition process a success.

LEVERAGE REMOTE MEETINGS AND COLLABORATION TOOLS TO INVOLVE MORE STAKEHOLDERS

Doing an M&A deal the old way involved a lot of unnecessary travel. Not only was it exhausting to spend so much time on planes, but meeting in person also had its limits. Flying is expensive, and we couldn’t bring every stakeholder to a potential acquiree’s offices. So people would end up dialing into an in-person meeting from elsewhere, and often miss parts of the discussion they needed to hear. There simply wasn’t a good way to get all the necessary people involved.

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A Zoom room, on the other hand, has no occupancy limit. When the bulk of your M&A process is handled remotely, it’s easy to loop in whoever you need, whether it’s stakeholders from either company or outside experts like accountants and lawyers. Collaboration tools like virtual whiteboards make it relatively easy to replicate the freewheeling spirit of an in-person discussion.

The advantages of a remote process really came into focus once the deal was nearly done and we began hammering out an integration plan. We had 30 people on our integration team across four geographies—about four or five times the number of people who would have been able to participate if we’d been flying them out.

Sure, I missed chatting with other team members after the workday at a restaurant, but we were still able to meet for meals of a sort, even if it was lunch for me in California and dinner for our colleagues in the U.K. And with more people in the “room,” more relationships were being built, if only virtually. That’s incredibly important for the long-term success of the acquisition and the health of the newly blended company.

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RESERVE IN-PERSON MEETINGS FOR WHEN THEY HAVE THE MOST IMPACT

A lot of experts will have you believe that M&A is about mind over heart. They see it as a matter of looking at spreadsheets and seeing if the numbers line up to make a good deal.

But for me, M&A is as much about the heart as it is about the mind. You need both elements for a deal to succeed. Founders pour their time, money, and energy into their companies, and they are incredibly careful about who they’ll trust with their creation. They know that many acquisitions end poorly when an ill-matched acquirer loses sight of what made the acquired company special in the first place, mismanages its team, or squanders its potential. (I know the pain of this process personally, having been through it as an employee myself.) Before they’ll sign any papers, founders need to know they can trust you. And it’s just not possible to fully build that trust over Zoom.

That’s why I found myself alongside a few board members on a flight to Los Angeles in October 2020, when pandemic restrictions were in full swing. We were all nervous about flying during COVID-19, but we felt we couldn’t move forward on the deal without at least one in-person meeting. So, we donned our masks and boarded a plane.

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Compared to the multi-hour sessions I was used to, when meetings spill over into drinks and dinner, this meeting with the founders was brief—only about an hour. But it was enough for both sides to understand we were seeing eye to eye. The deal moved much more quickly after that. I’m convinced to this day that if we hadn’t gotten on that plane, the deal wouldn’t have gone through.

Now that many business travelers are protected by vaccinations, the threshold for hopping on a plane doesn’t have to be as high as it was for me in the fall. Sometimes more efficient information gathering is a sufficient excuse. Spending the day with a founder in person can sometimes tell you more about the company and its products or services than you’d discover in three months of Zoom calls. The point is to pick and choose which meetings need to be in person, and don’t just default to traveling for every meeting. Save your energy for where it counts.

‘BACK TO NORMAL’ ISN’T ALWAYS BEST

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As pandemic restrictions lift, it’s normal to feel relief—even excitement—about returning to pre-March-2020 habits. But we shouldn’t be too quick to throw away the best aspects of our yearlong remote work experiment. Especially where M&A is concerned, there are good reasons to keep some aspects of the process virtual. By taking a hybrid approach, you’ll be able to involve more stakeholders, reduce unnecessary travel, and still get face-to-face contact when it counts.


Vijay Sondhi is CEO of NMI.

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