A Private Equity View on How Deal-Making Has Changed in 2020

Deal-making has traditionally been and is likely to remain dependent on interpersonal relationships. But technology is playing an increasingly critical role in helping private equity and venture capital firms to not only take quicker, more informed decisions on deals, but also obtain a more thorough understanding of the target company’s business, assets, financial performance and risks in acquisitions. COVID-19 has shown few signs of abating but new waves are still impacting many parts of the Asia-Pacific region. It is becoming increasingly apparent that physical meetings are, for the moment, a relic of the past, and more firms are relying on technology and artificial intelligence to boost speed and accuracy in the deal-making process.

In partnership with DealStreetAsia, DFIN joined Abrar Mir, Founder & Managing Partner of Quadria Capital and Nigel Lee, Operating Partner of Apis Partners at a recent webinar to discuss some of the best practices and avoidable pitfalls while navigating this shift. Moderated by DealStreetAsia’s editor-in-chief Joji Thomas Philip, the discussion delved into not just the impact of COVID-19 on deal-making, but on how PE firms who were behind the curve when it came to technology adoption, could sensibly deploy artificial intelligence (AI). “With AI, you can do preliminary due diligence, quickly and cheaply. You don’t have to bring in an entire law firm. AI and technology are not there to replace the human component but can speed up repetitive, inefficient tasks. Technology can help with processes that are taking away from the building of relationships between PEs and founders.” Adam Nguyen, co-founder and senior VP at eBrevia, a DFIN company said.

The panelists also explored how the pandemic has shifted assessment models from relationship-based to returns-based, and shared effective strategies to negotiate interactions with founders, LPs and GPs in the absence of in-person meetings, previously a vital component of understanding team dynamics and spotting red flags.