Last updated on June 23rd, 2023 at 10:21 am
Deals are complicated and the life of a mergers and acquisitions (M&A) professional is not simple. A typical transaction involves multiple global parties accessing confidential data from multiple locations, as well as significant time pressure from all parties. M&A advisers are responsible for making the deal happen, facilitating the agreement of the parties and closing the transaction. There is no such a thing as a simple M&A transaction and closing a successful deal can rely on how fast and efficient the information is made available.
Managing a team of successful deal makers is a herculean task. It takes in-depth understanding of the business dynamics and great skill sets. One needs to gauge in advance how potential regulatory changes may affect your operation, what are the macro trends that may affect your business, do you have the right technology to enable growth, the changes you may be required to make in the geographic footprints or headcounts.
The advisory business managers role is becoming increasingly important as investment banks look to optimize the value they bring to their clients. For them having a detailed business data and understanding about past and current deals, what outcomes the clients are looking for are the key to their success. Investment bankers have become savvier with their reporting and encourage their teams to input activity in CRMs.
However, this information is rather two dimensional and does not give them insights into which deals have been successful and for what reason. Lack of proper insights into these metrics makes it tougher for business managers to take key decisions. In a recent global survey, deal makers stated that lack of insights and visibility pose big challenges.
For business heads this problem is even more acute, as the critical information assembled by their deal teams manually tends to get lost over time and cannot be maximized to its fullest potential. Forecasting the timing and outcome of deals becomes harder to identify, metrics captured in spreadsheets may not trackback to the reporting hub. This creates visibility challenges and hinders productivity for deal teams.
A VDR can help solve this problem and makes the M&A process easier, enabling buyers to examine the target company’s financial records, contingent liabilities, in-force contracts, litigation risks and intellectual property issues safely and thoroughly, without the seller risking unauthorised access to the data and tracking all access.
M&A transactions involve multiple parties like investment bankers, corporate lawyers, different levels of internal departments, M&A teams and consultants, as well as employees of both the selling and buying company to interact with each other regularly. Moreover the role and the level of access of each player differs. Often, a deal starts out with a number of potential bidders, all of whom require access to information. For the seller, it is challenging to keep track of the key people representing each bidder, their access to confidential information and their level of interest.
Using a well-structured data room allows sellers to: (i) easily track and determine which bidders are showing more interest in the transaction; (ii) comply effectively with regulatory requirements for data access; (iii) obtain reports of activities performed by each bidder team or user, which are available 24 hours a day in real time; (iv) review specific actions by bidders, such as viewing, downloading or submitting questions; and (v) determine which bidders are progressing faster with their due diligence and make decisions faster as a result.
While technology offers multiple ways to communicate, from email to instant messaging, telephone conversations and video conferencing, it can be difficult to keep a track of every communication relating to a transaction.
A VDR maintains all engagement records in one place, helping avoid any confusion at a later date. Moreover, it ensures protection of all communication flows. All M&A processes are subject to compliance requirements. As part of any due diligence process, it is important for companies to keep records, both while the transaction is live, but also after its conclusion. This adds transparency to the process.
In multimillion-dollar deals, it is vital to have detailed records of users with access to information, their user permissions, and importantly, deactivation of access once the deal is concluded. Unexpected developments can occur in a M&A transaction, regardless of how careful both buyer and seller have been to ensure all topics are covered. In such a situation a VDR facilitates changes in users, permissions, access levels, deadlines or other critical issues and notifies it to all parties automatically. This helps to avoid delays and the loss of time and money caused by slow communications.
The Confiex team specializes in providing premium virtual data room solutions tailored for businesses. With their vast experience in working with document sharing platforms, they have been actively supporting the Virtual Data Room community since 2015 by offering valuable information to users free of charge.