With the reopening of economies across the United States and Europe, investors will start searching for the “new normal”. While national economies may be open for business domestically, international travel has already been substantially dampened. Government-imposed quarantines and general fear of Covid-19 transmission may be forced to linger until a global vaccine is available. Long distances between cross-border deal counterparties will only feel longer, perhaps worlds apart.
And yet for principal investors in cross-border private equity and real assets, business must go on. In normal times, investment due diligence relies heavily on information that is acquired in the course of travel, visits and relationship building, ultimately to build confidence in financial projections and trust in individuals. But these are not normal times, and so trust and confidence building will not involve sitting face to face.
In the coming year, we will see principal investors moving towards virtual investment due diligence. Working with family offices, infrastructure and private equity investors on long-term, cross-border projects, we at Emissary Holdings see three key trends emerging to support the virtual shift.
These are: (i) use of trusted communities as a requirement for partner selection, (ii) corporate intelligence services as a pro forma to the investment review process, and (iii) dispute resolution scenario planning as a new best practice.