The Prospects Of Using VDR For Mergers And Acquisitions

Virtual data room helps to model, improve, monitor, and optimize the M&A deal workflow, and improve the quality of service for external and internal customers in the company. Here is more about it.

–°urrent trends in the development of mergers and acquisitions

Mergers and acquisitions (M&A) are transactions that, together with the transfer of ownership, imply, above all, a change of control over the enterprise. Thus, the acquisition of small, including those focused solely on speculative income, stakes in individuals and institutional investors. The concept of acquisition covers the acquisition of the entire enterprise, its parts, as well as strategic participation in capital.

The main reason for restructuring companies in the form of mergers and acquisitions lies in the desire to obtain and strengthen the effect, ie the complementary effect of assets of two or more companies, the combined result of which far exceeds the sum of the results of individual actions of these companies. A merger may be appropriate if two or more companies have complementary resources at their disposal. These companies will be more expensive after the merger than the sum of their pre-merger costs, because each acquires what it lacked, and receives these resources cheaper than they would have cost them if they had to create them themselves.

For M&A to be successful, it is recommended:

  • correctly choose the organizational form of the agreement;
  • ensure clear compliance of the agreement with antitrust law;
  • have sufficient financial resources to unite;
  • in the event of a merger, quickly and peacefully resolve the issue of “who is in charge”;
  • to involve not only senior but also middle management staff in the merger process as soon as possible.

What are the prospects of the M&A data room?

The first condition to efficient M&A transactions is ensuring the organizational form of the agreement. During the transaction, and accompanying due diligence procedure, a large number of documents and business-critical data are processed. Thus, there is a need to provide a secure data warehouse and digital platform for file-sharing, like a virtual data room.

Data room is a system of structured storage of electronic documents that ensures the reliability of storage, confidentiality, and differentiation of access rights, tracking the history of document use, fast and convenient search. 

According to data room provides the following benefits:

  • Transparency of processes, increase of controllability. At any time, you can find out what stage the task is at, what status the document is in, and collect task performance statistics for different periods.
  • Improving executive discipline. Full control over all stages of work and personal assignment of tasks encourages employees to more responsibly perform their duties, formalization of processes reduces the impact of the “human factor” and the risk of error.
  • Identification of “bottlenecks” in the work of the organization. By analyzing the statistics of the implementation of processes, you can identify the areas with the highest number of completed errors or overdue tasks, and take measures to eliminate them.
  • Security. The system provides access to data strictly following the assigned rights of users, and all actions with the data are recorded.
  • Save time for managers. The complex process is set up once and does not require constant monitoring and supervision, monitoring tools are available in real-time from your workplace.
  • Increasing the speed of decision-making. By combining disparate customer data, data processing and analysis are accelerated. As a result, those responsible for interacting with customers can see the entire history of contacts, more quickly respond to requests and make decisions on them.