According to Stephan Feldgoise, Goldman Sachs is using drones in its teleconferences and virtual site visits to show clients what they’re bidding on. Feldgoise is Goldman’s M&A global co-head.
COVID-19 has made many company traditions change. Meeting with clients in person and travel came to a halt because of the pandemic. One of the processes involved in merges and acquisitions, the due diligence process, has been largely affected by the changes. Drones are now being used for virtual site visits and tools like Cisco Webex, Zoom, and Microsoft Teams. The drones have conducted virtual tours of chemical factories, shipping ports, warehouses, railroads, big-box stores, and everything in between.
Feldgoise said Goldman has acted as an advisor in several hundred M&A transactions during the pandemic, and 95 percent of them were completed with no face-to-face encounters.
“We have been selling asset-based businesses all over the world using drones for site visits and flyovers. It gives buyers the confidence they need because when you are buying a business, you want to see, touch, and feel what you are buying,” Feldgoise said.
Investment banking typically involves junior partners who are technologically savvy to support their senior bankers. Social events have been widely used to win the deal. But COVID halted the in-person events, and deals are closing on screens. Drones, meanwhile, are used for live sessions and recording videos.
Feldgoise said, “Drones are likely here to stay. We believe it will change the M&A landscape forever.”
JPMorgan Chase has also started using drone technology to seal the deal, as have boutique banks. The cost is relatively low, considering. It can cost $1,000 or more for a commercial drone, and bankers usually add a videographer service, which can cost $10,000 or more.
M&A deals were up by 152 percent in the third quarter. Advisors say the newer process is more efficient than the old methods. Goldman is working with double the number of bidders in the latter stages of the deal. That means the odds of a closed deal are higher.
Some say remote technology is here to stay, even if the pandemic comes to an end. Bill Gates has said that nearly 50 percent of all business travel probably won’t go back the way it was.
But JPMorgan CEO, Jamie Dimon, said he’ll still travel to meet with key players in the deal. But, most bankers say some parts of the deal are easier to accomplish over videoconferencing.
One anonymous banker said, “I’m not sure you’ll never again get 40 people in a room to watch a management team do their dog and pony show. To get 40 people on a plane, have them all stay in hotels, to go to a five-hour meeting, and to get back, it takes two or three days of your week. Now, it literally just takes the five hours required for the meeting, and you haven’t left your house.”