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Drones help Goldman Sachs close billion-dollar M&A deals

Drones help Goldman Sachs close billion-dollar M&A deals

Due to coronavirus travel restrictions, investment banks such as Goldman Sachs are using drones to provide clients with a bird’s eye view of the companies they’re bidding on, says Stephen Feldgoise, the bank’s global co-head of mergers and acquisitions.

Drones help Goldman Sachs close billion-dollar M$A deals

Feldgoise continued to say that ever since the VOCID-19 outbreak, the investment bank has been using commercial drones to showcase properties that include warehouses, big-box retail locations, chemical factories, and more.

“We have been selling asset-based businesses all over the world using drones for site visits and fly-overs,” Feldgoise said in a phone interview. “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. ”

Investment banking isn’t necessarily known for its fast adaptions of new technology, however, COVID-19 seems to have changed that.

The in-person meetings, travel, and site-visits that play an important role in the M&A process can no longer be performed safely, and thus have investment banks such as Goldman Sachs been forced to turn to new technology such as drones, Zoom, Webex, and Microsoft Teams. The drones are naturally used to provide aerial overviews of the various properties.

Since the start of the pandemic, Goldman Sachs has advised on hundreds of merger and acquisition transactions, 95% of them were done without any face-to-face interaction, said Feldgoise. He added that drones are likely here to stay, “We believe it will change the M&A landscape forever.”

Goldman is not the only investment bank that has turned to commercial drones for help. JP Morgan has also started to use drone technology, according to a person with knowledge of the bank’s processes.

Even smaller investment banks are now using drones, reports CNBC. TKO Miller recently helped a company sell itself to a competitor and aerial footage from a drone was used in a two-minute video to showcase the business.

“We’ve proven the benefits of drone footage,” said Erik Eidem, a veteran TKO banker. “The pandemic made it a necessity, but people are very happy about it, they feel they’re getting a better sense of the business early on.

Eidem continued to say that commercial drones typically cost a thousand dollars or more, but bankers would typically hire videographers who charge $10,000 and more for well-produced video tours of a facility.

During the COVID-19 pandemic, dealmaking has not slowed down at all. According to Dealogic, translations are up 152% in the third quarter to $1.13 trillion. Goldman Sachs is the top-ranked deal advisor both by transaction value and deal count.

The coronavirus has forced banks to make their process more efficient and without the traditional travel, site visits, and face-time, but now senior bankers can be involved in closing more deals at the same time.

It will be interesting to see if the new technologies such as drones, Zoom and other video conferencing tools will have changed investment banking forever.

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Photo courtesy of KTO Miller

Haye Kesteloo

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