The pros and cons of virtual pitching: Client engagement vs. the bottom line

November 12, 2021

The shift to virtual meetings during the pandemic forced a change in the dynamics of dealmaking among bankers and their clients. As traveling ground to a halt, pitches and networking activities had to be conducted virtually. Despite this paradigm shift, 2020 was a banner year for M&A deals and 2021 is set to be even stronger. Although many dealmakers yearn for the return to in person collaboration, virtual dealmaking revealed many benefits that will likely last beyond the pandemic.

The pros: cost, carbon footprint and tech adoption have risen up the agenda

Despite the obstacles dealmakers faced, virtual dealmaking proved effective. According to PwC[1], there were a record number of deals in the first half of 2021 and in the recent survey from The Deal, 68% of dealmakers reported a greater success rate of pitching virtually while 78% of those receiving pitches said that they were just as effective as in-person pitches, if not significantly more effective. Financial institutions also recognized reduced travel costs and greater flexibility, which led to more meetings, increased productivity and ultimately a higher volume of deals.

Reduced travel also aided firms’ sustainability agendas. Environmental, Social and Governance (ESG) programs have become more than a box ticking exercise with growing investor appetite for companies with strong ESG credentials[2]. With COP 26 pressuring banks to reflect on their lending and investment portfolios, some have even pledged ‘net zero’ targets, dealmakers know that they can’t ignore the environmental impact of going back to traveling thousands of miles to pitch a deal.

Then there’s leveraging technology for creative dealmaking. The Deal Survey revealed that 84% of clients reported an increase in pitches that highlighted potential advisers’ success in a virtual environment and 71% of clients said that creative approaches to virtual pitching were partly responsible for them awarding advisers with transactional services mandates. With the increased number of virtual pitches, the need to stay competitive has led banks and other businesses to rethink their technology arsenal with an eye toward upgrading their digital capabilities to give them a competitive edge, because executives receiving pitches clearly favored advisers who not only exhibited subject matter expertise, but were able to seamlessly incorporate technology in the dealmaking process.

The cons: The impact on collaboration and information security

Information security, compliance and collaboration play a big part in pitchbook creation, and although the industry was quick to adapt to virtual pitching, there were significant data security challenges, with The Deal Survey revealing that 73% of dealmakers citing cyber security as their biggest concern in virtual pitching. Most financial institutions have strict infosec policies which require sensitive information to remain in their offices, behind their firewalls. The lockdown forced businesses to make rapid adjustments to their networks to allow dealmakers and their support teams to work remotely. Along with connectivity and compatibility issues (i.e. some companies firewalling Zoom), many dealmakers found themselves frustrated when trying to virtually collaborate with clients, colleagues and support staff.

The other hurdle of virtual dealmaking is the ability to build new relationships. In the M&A and transactional world, where relationships are king, 70% of bankers surveyed by The Deal said that lack of in-person networking events hindered their ability to secure new clients and 58% said the inability to build personal relationships further complicated the process of getting deals done.

Conclusion: The pros will stay and the cons can be overcome

Despite the challenges, the most successful banks have been quick to acquire technologies focusing on cyber security and collaboration. Additionally, more business leaders are turning to outsourcing partners to help meet rising support demands; providers with expert presentations and design teams that build creative pitches that communicate to clients with impact. It’s imperative that these outsourcing providers have strong infosec protocols and can rapidly and securely deploy workflow technology that helps dealmakers track end-to-end pitchbook creation. The combination of expertise and workflow management gives dealmakers access to greater design expertise while having complete chain of custody of client facing collateral from start to finish.

In-person networking events are slowly coming back as dealmakers and their clients mostly take a hybrid approach to office returns and face-to-face meetings. There will always be a place for in-person interactions, but with client pressure to keep business transactions fluid, ESG rising to the fore, and the cost benefits of traveling only when needed, virtual pitching is here to stay.

To find out more on the future of virtual pitches, processes and transactions in the dealmaking system, download the future of virtual dealmaking in partnership with The Deal.

[1] PwC, Global M&A Industry Trends: 2021 Mid-year Update, July 2021: https://www.pwc.com/gx/en/services/deals/trends.html

[2] The Banker, ESG becoming core to investor appeal, 26 October 2021l: ESG becoming core to investor appeal – Sustainability – (thebanker.com)