Ascentric, which was sold by Royal London to M&G during the national coronavirus lockdown, may have opened up the consolidation market to the possibility of completing ‘digital acquisitions’.
The transaction, which was confirmed on 27 May, was largely completed through “digital means”.
Corporate development director at Royal London, Steve Murray, spoke about the nature of the acquisition: “Meetings were conducted online, due diligence was carried out in virtual data rooms and the final deal was signed digitally using DocuSign technology.
“There is a traditional view that these sorts of deals need to be done face to face. We saw some material benefits to adopting a virtual approach. For instance, using platforms such as Pexip and Microsoft Teams actually made it easier to get all the relevant parties together.
“You don’t have to find the time in someone’s diary for them to travel to meetings, usually in London, that in reality last a couple of hours, so there are valuable savings in terms of time, resources and money. The fact that most people were in ‘lockdown’ also meant that most people had lots of potential availability.”
Murray also highlighted the benefits of a ‘digital acquisition’ in terms of security and confidentiality: “News of these deals often becomes known because a certain person has been spotted in a certain place – this is clearly not an issue with online meetings.
“Virtual data rooms are already widely used and have security measures to allow parties to share documents in a secure way with appropriate restrictions for particularly sensitive material. You can very readily monitor who has seen what, allowing a good assessment of the effort counterparties are making on due diligence.”
However, there are drawbacks to ‘digital acquisitions’, as Murray also explains: “People living in different parts of the country have very variable qualities of internet connections with most households seeing far greater pressure on bandwidth,” Murray says.
“We also had to take into account that many people were balancing their work with childcare or the support of vulnerable family members. We also had to deal with the fact different organisations use different platforms and some organisations don’t enable the use of any technology other than their own.
“We had recently moved the vast majority of our workforce to home working in a very short period, so we had already done a lot of work to ensure the solutions we used were secure and robust. Our ability to make this successful transition to home working stood us in good stead to carry out this transaction.”
“This experience will change how such transactions are carried out in future in the same way that lockdown is doing to change the way we all work. Employing a virtual approach allowed us to carry out this transaction quickly and securely and shows how adaptable people and businesses can be if they challenge traditional ways and look at other ways of getting things done.”