The process of completing an M&A today, including the M&A deal closing process, 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 M&A 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 any M&A deal 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 M&A deal closing process by assigning an administrator to respond to any M&A due diligence questions raised from a particular groups, 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 the acquiring company and potential target 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 process without having to travel across town, across the country or across the globe.
5. Predictive Analytics
The use of predictive analytics can help in forecasting the outcomes of M&A activities with greater accuracy. By analyzing historical data, market trends, and the financial health of entities, predictive models can provide insights into the potential success of a merger or acquisition, helping companies make more informed decisions.
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, weeks, or even months is often completed in hours, saving both time and money for everybody involved, bringing the deal process 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 transaction. 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.
8. Blockchain Technology
Blockchain could revolutionize the M&A process by providing a secure and transparent way to conduct transactions. It can be used for the verification of transactions, smart contracts, and ensuring the integrity of the data shared between parties. This technology could significantly reduce fraud, streamline due diligence, and speed up the transaction process by providing an immutable ledger of all activities and documents.
9. Integration Software
Post-merger integration is a critical phase in the M&A process, often determining the success or failure of the transaction. Advanced integration software can assist in merging IT systems, corporate cultures, and operational processes more efficiently, ensuring a smoother transition and quicker realization of synergies.
10 Regulatory Technology (RegTech)
Compliance with regulatory requirements is a significant aspect of M&A transactions. RegTech solutions can automate compliance processes, monitor regulations in real-time, and ensure that all aspects of the deal adhere to the necessary legal frameworks, reducing the risk of non-compliance and associated penalties.
In Closing
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 M&A 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.
Sources:
Castellanos, S. (2019, November 4). 3 Technologies That Can Ease the M&A Process. InformationWeek. Retrieved February 27, 2024, from https://www.informationweek.com/strategic-cio/digital-business/3-technologies-that-can-ease-the-manda-process/a/d-id/1337205
Howlett, D. (2019, October 7). Mergers and acquisitions: Five ways tech can smooth the way. ZDNet. Retrieved February 27, 2024, from https://www.zdnet.com/article/mergers-and-acquisitions-five-ways-tech-can-smooth-the-way/
Deloitte. (n.d.). M&A technology helps speed up M&A transactions. Deloitte United States. Retrieved February 27, 2024, from https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/articles/m-and-a-technology-helps-speed-up-m-and-a-transactions.html
TGC Capital Partners. (2023, November 30). The Transformative Impact of Technology in Mergers and Acquisitions. Via LinkedIn. Retrieved February 27, 2024, from https://www.linkedin.com/pulse/transformative-impact-technology-mergers-acquisitions-fu3sf/
