There is no doubt that the disruptions of the last 2 ½ years helped to drive digitalization, enormously. Many of us were already spending a large part of our working time in front of digital devices. In a professional context first contacts were by default handled via video call and consumers became even more willing to engage in e-commerce transactions. Not to mention new leisure habits.
The entrepreneurial landscape of course evolved and changed accordingly, whereby a look through the private equity lens helped to detect these changes rather early in the process. With regards to the performance of portfolio companies investors took a differentiated approach as early as 2021 – and few sounded euphoric. It became too apparent, too soon, which companies would benefit from the crisis and which not.
Now, it may not come as a surprise that a society and a world that had been geared towards increasing openness and mobility for many decades would not prosper under lockdown conditions. Nevertheless the long term repercussions are potentially more complex.
If globalization is indeed „dead“, as sometimes stated, regionality might gain in importance and the oppportunities to interact on a more personal level increase, both in private and in business. Online purchasing may seem efficient as long as the parcel is not (temporarily) lost with some neighbour and is not returned to the seller for one reason or another. And if so, that the increasingly rare physical post office is not too far and the line in front not too long. As far as online meetings are concerned, the good old face to face, may have had its advantages after all.
Allow me an anecdote to illustrate:
I had been in touch with an investor from a country neighboring Germany for quite some time to share news and investment opportunities. At some point we were ready to meet online, the typical video call, with regards to a specific project. The project being a target company looking for a financial or strategic buyer that I had introduced with a thought through pitch deck and the usual financials. The participants in this meeting, in addition to myself, included the investor, the management of a portfolio company already owned by the potential buyer (to clarify potential synergy affects) as well as the managing shareholders of the target company I advised.
We took our time, but conferences of this kind rarely exceed 90 minutes. The outcome of these meetings is rather inportant for both sides, the concentration level thus high and difficult to maintain for long.
As for the project, however, we did not persevere. One reason, and I am entitled to say so, since I communicated this out with the various participants just as frankly: the players on the side of the potential buyer appeared as rather distanced, almost desinterested to us.
Subsequently our exchange paused, for a variety of reasons (of which personal chemistry was not the least important). The communication re-gained momentum in a second round though and a personal (as in: face to face) meeting was arranged, whereby the buyer-team visited my client.
In comparison with the virtual meeting the impression could not have been more different. The alltogether four representatives of the buyer were perceived as the interesting personalities they all were – hardly overlapping with the clichés of founder and financial investor (actually, one might have confounded them). The conversation was more than friendly and both sides participated with openness and curiosity. To which many factors contributed. Including the notorious mood of the day and the more than obvious pleasure to finally join in „good old school meetings“ again.
We could not have been more euphoric thereafter. As a seller team we did eventually come to terms with another buyer and closed the transaction sucessfully, but this had a lot to do with the overall course of the transaction process. Had the personal meeting taken place at an earlier point in time, without the break, I would honestly not be able to tell which investor my client may have opted for.
So much for the helpfulness of online- processes and conferences. Indispensable in our communication tool set by now. But sometimes (how often, do we know?) blocking rather than transmitting what needs to be conveyed.
How about other digital processes?
By the way, have you been to Bode Museum in Berlin? Did you know that the construction of this building, towards the end of the 19th century, was completed within 6 years? According to plan, as I would assume. Entirely without Slack.