There is no doubt that Covid-19 represents a new challenge in all sectors of the economy, let alone the legal world. In light of this, the issue of distant or virtual closings in corporate finance transactions is revisited by Elena Georgiou, who provides practical guidelines as to how to structure the closing of a deal around the “virtual” table.

Year 2020. A beautiful number for the New Year. And yet, the dawn of 2020 has found humanity battling an epidemic threatening human lives and the future continuity and daily routine of humanity for months to come. Nevertheless, history has proven that humans can be resilient and resourceful in difficult times, wars, epidemics, economic crises.

It has been documented that military necessity in times of war has sparked technological development. The revolutionary technology of radio-based detection and tracking was the product of research and development during the World War II. Additionally, the layout of European railroad networks widely enjoyed by travellers was strongly influenced by strategic military considerations. The widely known GPS (global positioning system) navigation system was created for U.S. military use in the 1990s. All the above are just a few examples of how governments, companies, individuals can coordinate efforts in research and development to produce technologies for a better life.

There is no doubt that the COVID-19 pandemic represents a new challenge in all sectors of the economy, let alone the legal world. Turning to the specific issue at hand, which is the negotiation and conclusion of a corporate finance transaction, significant importance is attached to the need to have all parties, their representatives, legal and financial advisers physically present in the same place, in the same conference room. This takes the form of several meetings while a deal is being negotiated, leading to a final meeting when the closing of the deal is achieved; documents are in final agreed form, they are executed by the relevant parties, they are exchanged, hands are shaken.

Anyone with little experience in these types of closings, or who has heard relevant rumours from fellow colleagues, is wise enough to extend a polite warning to her or his family on the day of the closing that she or he might not be home in time for dinner. And despite the thrill of negotiations that many of us may enjoy during physical closings, there are technologically advanced ways that can facilitate such closings. The current epidemic has revealed a new opportunity to adopt new virtual ways which are not only less time consuming for legal counsel and representatives of parties attending the meetings in these transactions, but also more cost-efficient for the client who at the end of the day will not have to compensate the professionals involved for making themselves “physically” available during closing negotiations. Research produced during this global pandemic focusing on the inner workings of companies who have had to transition into a “work-from-home” scheme for their employees, restricting physical, internal or external, meetings, revealed surprising findings: employees’ time is usually spent on physical meetings, consuming most of their weekly hours and allowing them less time for the actual, substantial work, shifted into time constructively spent on the production of such work. This conveys a message that physical meetings might be over-estimated, if not unnecessary for conducting closings.

In light of the new normal, with restrictions imposed by several jurisdictions on travelling and physical meetings, the mechanism of the “virtual” closing should be revisited as it represents a getaway to overcoming logistical difficulties and delays.

Before embarking on a “virtual’ closing, the following key takeaways should be adopted:

Ante closing

Around the “virtual” closing table

Post closing

As a forward-looking law firm, from the beginning of this pandemic, we have been working closely with our dedicated IT team for the implementation of digital or virtual tools, mechanisms and software so that we may continue to maintain our policy of delivering the best level of service to our clients.

Elena Georgiou | Senior Associate