More and more information is being created, stored, and transmitted electronically. Data Room electronic document management makes M&A operations more convenient, fast, and high-quality.
What is the purpose of Data Room in M&A deals?
In the context of the financial crisis and its consequences for companies, it is becoming increasingly important to search for possible ways to acquire additional competitive advantages. One of these ways can be a merger and acquisition (M&A) transaction.
In a market economy, M&A is an important method of implementing a growth strategy aimed at maximizing business value. In carrying out mergers and acquisitions, managers and owners of enterprises pursue the following goals:
- expanding the scope of the enterprise by acquiring control over competitors, distributors, or suppliers;
- entering new sales markets and strengthening the competitive advantages of the enterprise in the market;
- elimination of competitors and strengthening of the company’s position in the industry;
- growth in business value; growth in the wealth of shareholders;
- financial recovery of a crisis enterprise by joining it with a financially strong partner, etc.
Deciding on the part of the initiating company to conduct a merger and acquisition transaction requires significant efforts from its management in assessing the profitability of the planned event. Therefore, when planning such a transaction, it is necessary to conduct due diligence on the target company.
In organizing due diligence procedures Data Room software takes a special place as it provides a secure working environment for storing confidential files. Thus, Virtual Data Rooms are used to process sensitive business transactions.
The following areas are considered to be the main areas for the exam
- Legal situation
- Financial location
- Tax and business analysis
- IT and infrastructure
- Trade and other commercial activities.
What Data Room advantages are useful for M&A deals?
The tasks of the Data Room document management today have already gone far beyond the contour of “classical office work”, and this significantly increases the requirements even for the basic functionality of the software.
There are the following advantages:
- document management – input and registration, day-to-day work, flow control;
- communication with paper document flow;
- reduces the time spent on everyday routine work – there is no need to search for a long time, agree on papers, their turnover is accelerated;
- protects information from leakage, ensuring data security and strict differentiation of access rights;
- tracking the relevance of documentation (especially external, incoming) and archiving obsolete documents;
- maintaining an adequate level of information security;
- simple and intuitive program interface for end-users.
The electronic document management system in the Data Room should be equipped with convenient configuration and localization tools and should scale well. The developer must provide for the possibility of organizing a single Data Room in geographically distant divisions of the company. In the system, it is necessary to organize an orderly electronic exchange of information between hierarchical levels, as well as to correctly implement it in a real enterprise.
Document flow automation with the help of electronic data rooms provides new opportunities for any organization to speed up work and optimize internal processes. Automation of workflow allows organizations to significantly simplify the problems associated with the search, access, and storage of documents, and as a result to avoid many problems that arise in the process of document management.
Solving the problem of document management via Data Room in modern conditions will make it possible to purposefully form the information resources of organizations, reduce the amount of information entered manually, and ensure their effective functioning.