The current wave of “blockchain” in M & A
M & A (M & A) can be complex, time consuming and costly. There was a debate about the influx of technology in conducting M & A, but we are waiting to witness a substantial change.
The need for technology
The market needs technology that effectively reduces risk and enables traders to enter into contracts with a higher level of comfort, regardless of the location of the parties that are particularly important in cross-border transactions. is.
As a digital technology that can automatically record and validate transactions in real time, blockchain seems promising for making M & A transactions more efficient and cost effective. Blockchain can significantly change the way investors evaluate, negotiate and execute transactions. Therefore, the benefits offered by blockchain outweigh the costs and risks.
Application of blockchain technology
1.1. due diligence: Blockchain provides a digitally shared database that cannot be tampered with. You can use this database to create a persistent, immutable record of the information disclosed during due diligence to improve data connectivity. More importantly, the decentralized nature of blockchain also protects the transfer of intellectual property.
2.2.Smart contract: Another potential application of blockchain technology is the use of “smart contracts”. Smart contracts have the potential to streamline the process of negotiating M & A contracts. In addition, digital monitoring of closing conditions can facilitate automatic transaction completion. Therefore, both parties are guaranteed that their payments and assets will change as programmed. Drafting revenue reserves is simplified-payment can be automated when a Tiger event occurs.
Obstacles and future directions
Blockchain implementation is not possible without strong network access. Therefore, the platform needs to be designed more accurately. Many players struggle to get used to the technology, and it is still widely recognized that it is only related to cryptocurrencies. At the global level, countries are developing legal frameworks for blockchain, and given regulatory uncertainty, liability issues remain unresolved. That said, the wave of blockchain technology is already on the market and has the potential to revolutionize M & A transactions.