In this chapter from our Transaction Management eBook, Owen Oliver, Head of Product at StructureFlow, discusses how visualisation tools are changing the game for deal planning and structuring.
Throughout history, humans have relied on visualisation to bring together complex information. You only need to recall the NASA control centres of the 1960s directing the moon landing missions to understand that visualisation has helped us tackle some of humanity’s most difficult challenges.
Corporate transactions, and the legal structures and processes that underpin them, can be incredibly complex, and they are also highly collaborative processes. A typical M&A transaction might involve 40-50 individuals across multiple organisations, each with key responsibilities to optimise the deal structure, analyse risk or foresee potential issues. The stakes can be high, and everyone needs to get on the same page as quickly as possible.
Creating visualisations at the planning stages of complex transactions is critical. Whether what’s needed is a transaction structure paper or steps plan, a group structure created during due diligence, a map of completion payments, or a timeline of the process – visualisations are key to mitigating risk and ensuring everything runs smoothly. They not only bring alignment but provide a holistic viewpoint that improves the working group’s ability to make better decisions, highlight areas of opportunity and optimise the path forward.
Despite the importance of visualisation, legal and finance professionals have until recently been without access to bespoke tools to help. Whilst engineers designing a power plant would use Computer-Aided Design (CAD) to create a construction blueprint, transaction professionals would be left to assemble the financing structure in PowerPoint.
Into that vacuum, bespoke software for transaction visualisation and modelling has emerged.
Models of transaction structures can be created accurately and rapidly, through the use of a bespoke toolkit for the purpose. Entities, assets and contracts with predefined qualities are used in place of generic shapes, and connections between them are created to constitute ownership, contractual relationships or the flows of payments, rights or services. Clear, professional visualisations fit for purpose can be generated with minimal effort and experience.
However, these applications are not just diagramming tools for a specific purpose. They bring the potential to change the game in terms of how transactions are planned, structured and executed going forward.
Transaction modelling applications such as StructureFlow are intelligent. They understand the building blocks that make up the transaction and the way they relate to each other. Further information relating to the entities, assets and contracts involved can also be integrated from different data sources and consumed into the transaction model in a structured format.
With the software accessible by the wider transaction stakeholders, it becomes a collaborative platform for deal structuring as a whole. Visualisations become interactive interfaces into the details of every aspect of the deal – centralised resources for reliable, accurate data throughout the course of the entire deal process. When the deal closes, clearly structured data is available to business systems and organisation knowledge banks.
Combining visualisation with the underlying data unlocks the potential for even greater value during the planning stages, with the ability to analyse structures and models to identify key issues (such as conflicts of interest), highlight the need for particular actions or requirements (such as licence applications in regulated industries) and even assist in optimising the transaction structure itself for tax or commercial purposes.
What could the future look like?
At StructureFlow, we foresee transaction “control centres” – dynamic visualisations integrating openly with other systems, presenting the status and progress of every aspect of the transaction journey. Escrowed completion payments processed through Shieldpay, for example, could be dynamically directed and visualised in a StructureFlow interface as the transaction is closed out.
Corporate transactions may not quite ever reach the complexity of a moon landing, but visualisation is critical to the process all the same. As a new category of data-driven visualisation software, transaction modelling can empower professionals to take transaction planning and structuring to the next level.
This is a chapter from our eBook Transaction Management: Is technology taking over the deal? You can read more insights from legal industry voices on the role technology is playing in the transaction management lifecycle in the book. Download the eBook today.