The process of completing an M&A today is far more efficient than ever before, namely due to the tech boom and rise of the internet over the past quarter-century. Previous generations of M&A transactions would involve reams and reams of documentation, which could easily compromise security, not to mention the nightmare of trying to keep all parties on the same page. Electronic documents definitely make editing, version control and the ability to handle multiple scenarios on the fly a far quicker and more streamlined process. Today’s advances in M&A technologies have helped the entire process become far more timely, cost-effective and, most importantly, secure.
1. Virtual Data Rooms
A virtual data room (commonly abbreviated as a VDR, and sometimes referred to as a “deal room”) is an online space that is used for document storage during the M&A process. This is where the documents live and are accessed during the process and is particularly helpful during the due diligence phase of the negotiations. A VDR is one of the most efficient of all of the merger technologies available today, as it allows the right people to see the approved documents at the right time. And unlike M&A deals in the previous century, a VDR allows users to “enter” from anywhere else on the globe, saving both time and money for all parties concerned.
Furthermore, the data in the VDR is controlled, secure and timestamped, providing a record of who has viewed which documents and when. With an intuitive interface, the admin of the VDR is quickly and easily able to provide access, grant (as well as revoke) permissions and see a record of all activity that has occurred within. This is vital when dealing with the Q&A phase (commonly referred to as “due diligence”), a standard process in virtually every business dealing.
2. Q&A Technology
For example, Caplinked’s newly upgraded Q&A capabilities in its VDR helps to streamline the process by assigning an administrator to respond to any due diligence questions raised from a particular permissions group, allowing for faster (and more accurate) replies to those questions. In short, it directs certain questions to the expert in that particular area, such as legal questions being sent to the lawyer on the team, financial queries to the CPA, and so forth.
3. Improved Security
Prior to VDRs, an M&A would require one (or more) person from each company involved in the deal to be present during the process. These people, along with associated financial, legal and management professionals, would require access to the proprietary and confidential documentation, making version control and security of the documents very hard to manage. In today’s transactions, levels of encryption, permissions and online authentication help manage the flow of information but also allow the admin to maintain a high level of security and integrity within the business dealing.
4. Ability to “Go Green”
A large push is on (and rightly so) for organizations to “go green” and reduce their overall carbon footprint. Technologies that give participants the ability to work from their offices (or even their homes or the beach) when dealing with the M&A process are also good for the health of the planet. Gone are the days where participants would have to travel from here to there (and back again) in order to complete the transaction. The technology of today ensures that all parties will be able to be engaged in the deal without having to travel across town, across the country or across the globe.
5. The Advent of Artificial Intelligence
With the rise of artificial intelligence, many industries across the spectrum have been transformed (or at least improved upon), and that certainly includes the M&A world. With the use of AI in dealing with the analysis of items such as profit and loss statements, less time is spent on these low-skill tasks, reducing costs and expediting the overall process.
6. Quicker Completion of the Deal
Today’s technology, with its ability to streamline and automate things in the M&A process, allows both parties to close the deal faster than was ever possible in the pre-internet, pre-VDR world. What used to take days or weeks (or even months) is often completed in minutes and hours, saving both time and money for everybody involved and bringing the deal to the finish line quicker.
7. Cost Savings
All of the benefits described above also point to savings for all parties involved in an M&A deal. With less in-person participation required, which saves on travel and overall costs, faster turnaround and less physical products (such as printing, revising and shipping reams and reams of documentation), costs for closing an M&A deal have spiraled downward, and that trend looks to continue.
Technology has certainly helped the M&A process for companies in virtually every industry save time, money and global resources (along with several other things). Having a trusted third-party VDR provider that utilizes all the appropriate tools for the transaction like Caplinked is mandatory. The time and financial savings gained from these tools will certainly help the process come to a quicker, less painful conclusion that will satisfy all the parties involved. Reach out today to start your free trial.
Chris Capelle is a technology expert, writer and instructor. For over 25 years, he has worked in the publishing, advertising and consumer products industries.