Whether it is the driving force behind the decision to merge with another company, whether through a merger or the creation of a new company or an acquisition, the proper planning and implementation of the M&A process itself is crucial. So, how can Data Room make this process more productive?

Virtual Data Room: how to make M&A deals efficient?

A strategic factor in the company’s success in domestic and foreign markets is to increase its market value through financing, both through own and borrowed funds and through the external mechanism of mergers and acquisitions of M&A with another company. Such integration is one of the most common ways of development used by most companies today, even among the most successful. This process in modern conditions is becoming a common phenomenon, almost every day.

One of the key stages of an M&A deal is the due diligence procedure to form a complete and objective view of the company, assess the risks that may affect business activities in the future. In due diligence, the seller of a company discloses internal data and information. If there is more than one potential buyer, this disclosure often takes place in a so-called Data Room. For reasons of discretion, this Data Room M&A is rarely set up on the seller’s premises, but often in a neutral location at an M&A advisor or an investment bank.

The term Virtual Data Room arises from the current development in the use of modern IT infrastructures as an aid in document management and in supporting the cooperation of geographically separated teams. In recent years, digital Data Rooms have partly replaced physical data rooms. This is because a large number of corporate transactions take place internationally, and thus also potentially interested parties from abroad for M&A deals are involved.

How does the digital Data Room work?

Potential buyers receive an internet link from the seller or the commissioned M&A advisor, with the help of which, in connection with normal internet access and a browser, access to a secure area of a server is possible. Before entering, interested parties must authenticate themselves with their name or account and a password. You will then be given access to the area that is relevant and assigned to you. Different structures and representations can be implemented based on the existing, uniform database for different profiles and users. This makes it easier for certain target groups to find the content and documents they need.

The navigation through the digital database takes place with the help of an almost intuitive graphical user interface which, by clicking on it, enables access to documents and content and allows inspection. At this point, the user only has the opportunity to read the existing documents. This means that further use or copying is not possible.

With the help of the Data Room service providers, you can optimize the management processes around the M&A contract life cycle and accelerate company performance. So, the software provides the following possibilities:

• Manage internal inquiries in a central location and offer colleagues access to self-service functions via the collaboration portal.
• Increase quality with intuitive data entry based on business and legal rules.
• Control document management using integrated tools for editing, versioning, and compiling clauses and documents.
• Configure breakthrough dynamic workflows to follow correct legal contract processes and automatically create signature-ready contracts.
• Use advanced reporting functions and key performance indicators to monitor performance.