Agility, Resilience, and Speed – A Reflection on 2020 for M&A Legal Advisors

By Steve J. Tie Shue, Sr. Director – Product Marketing

COVID-19 disrupted transaction management for corporate lawyers across the globe in 2020 – resulting in greater reliance on digital technology, truncated due diligence timelines, and a general acceptance that markets will remain unsettled for the foreseeable future. Still, the expert panelists assembled for our recent Unexpected Lessons in M&A legal webinar, a partnership with the ABA, are unanimously optimistic heading into 2021. 

Here are three key takeaways from our discussion.

1. Law firms weren’t unprepared for remote work

Although remote work environments almost certainly proved challenging for legal teams, panelists agreed that the pandemic didn’t so much force digitization of legal workflow as much as it accelerated plans that were already underway. Ultimately, this is a testament to both the savvy of lawyers and paralegals in managing transactions as much as it is a proof point for the ROI of legal technologists within law firms.

Still, legal advisors still found themselves needing to find workarounds for sharing the most hypersensitive information relevant to deals. For example, corporate minutes – often reviewed in-person – are now shared within the VDR.  This places even greater emphasis on user-level permissions to prevent unauthorized access or duplication.

2. M&A due diligence timelines continue to shrink

Although remote work environments did not prove complete roadblocks for legal advisors in 2020, audience polling found deal team collaboration and maintaining productivity have been larger challenges.

In isolation, these challenges are concerning for any dealmaker. However, the impact of each becomes more acute given a trend towards truncated due diligence timelines in recent months. Panelists agreed legal teams are seeing a push to complete diligence in 9-14 days for public deals – approximately half the time of the historical benchmark of 30 days.

3. Expect more deals and – eventually – higher valuations in 2021

The second half of 2020 found markets rebounding in volume – occasionally setting new benchmarks or breaking records along the way. There was also significant diversity in the makeup of these transactions. Beyond the headline grabbing phenomenon of SPAC 3.0 and PIPEs, traditional M&A saw impressive activity in sectors like technology and pharma. The former riding a wave of increased urgency behind digitization of processes and capabilities. Green shoots were also apparent with renewables and industrials.

Sustaining this level of performance in 2021 is dependent on two major variables – the widespread availability of COVID-19 vaccines as well as continued government subsidies and stimulus support.  Our live audience reaffirmed this assertion.

Altogether, legal advisors proved not only resilient and speedy in 2020 – they also displayed impressive agility and skill in finding new ways to structure deals to protect their clients while capitalizing on market conditions. In doing so, they’ve help build a strong foundation to sustain improved deal velocity and, eventually, continued improvements in valuations in the year ahead.

For more insights from our year-end legal webinar, including market insights and R&W considerations, listen to the on-demand recording for free here. Promo code 1220DAT. CLE credit is available for select jurisdictions (review ABA accreditation for more information).