Mergers and acquisitions are a common practice of market economy development. These processes are active in the IT industry, which is determined by the high dynamics of its development.
What are mergers and acquisitions?
In world economic practice, there are three main options for the development of companies: through independent internal development of tangible and intangible assets; by gaining a competitive advantage by transferring certain tasks or processes to another company on a contractual basis, ie outsourcing; by the process of mergers and acquisitions.
Although many companies are quite successful build their strategy of domestic growth, in recent decades, mergers and acquisitions are increasingly the main competitive strategy, which is the fastest way to acquire assets and obtain new types of markets, and so on. A merger is a combination of two or more economic entities, which results in the formation of a new economic unit.
Virtual Data Room and M&A: what is the connection?
A reliable way to minimize the negative risks associated with concluding investment agreements and saving funds in the process of their multiplication is a detailed study of the company’s activities by conducting a comprehensive audit of due diligence. In today’s economic development, the most common form of providing such services is due diligence as an accompaniment to the conclusion of agreements in the framework of mergers and acquisitions.
As practice shows, conducting such an examination includes up to several thousand pages of confidential documents that need to be stored, exchanged with customers, which is not only time-consuming but also expensive. Prior to the spread of Internet communications, the acquaintance of potential participants in the agreement with the documents took place through the use of “physical data rooms” and it looked like this. The seller allocated or rented one or more premises in which folders with paper documents were demolished. Next, there was a schedule of visiting this room and working with documents for potential buyers, which can be many, and this in turn significantly increased the time spent on the transaction.
Today, the technology of a Virtual Data room is quite convenient, which allows you to create an online workspace. Using the digital data room in mergers and acquisitions is not an additional option, it is a necessity. The time when all M&A documents were saved in paper form is long gone. Nowadays, cloud computing offers us an excellent alternative: making all documents available online for deal parties.
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 is rarely set up on the seller’s premises, but often in a neutral location at an M&A advisor or an investment bank.
How to set up Virtual Data Room for M&A?
With Digital Datarooms, you can manage your transaction in three steps:
- Upload. Thanks to the drag & drop function, you can upload all documents to the data room with just one click. Direct synchronization and conversion of files into PDF format ensure that document processing is accelerated.
- Data Room index setting. To make the files quickly accessible, organize the documents using the automatic document index. At this stage, you can also name your documents in order to simplify the administrative process.
- Bidder teams management. M&A transactions involve numerous participants who have different authorizations. With the bidder access option, you can enter the names of the members in the list and delete them from the list.