Successful financial transactions require superior strategies, comprehensive due diligence, and well-developed integration plans. In mergers and acquisitions, both the sell and buy sides require convenient access to sensitive documents to complete the due diligence process and meet target closing dates. The best solution to achieve this and ensure proper deal management is a virtual data room (VDR). Here’s how a virtual data room helps during each stage of the due diligence process.
To facilitate the due diligence process, before the M&A is planned, the seller prepares the virtual data room and uploads sensitive pre-marketing documents that need to be available at short notice to all potential investors.
Historical information, compliance documentation, financial statements, and other crucial confidential documents are easily distributed to virtual data room users. During this process, potential buyers may ask questions about documents or even request additional ones. Once due diligence is completed, the deal is closed and the content of the virtual data room is archived.
The virtual data room helps merged companies integrate their financial, legal, IT, and other departments. As the new company continues its growth path, the virtual data room serves as a corporate document repository and assists executive communications. Storing corporate information in the virtual data room instead of a traditional physical data room results in seamless collaboration.
Today, virtual data rooms are the industry standard for secure document sharing. Compared to a physical data room, M&A virtual data rooms save travel time and expenses, make document access easier, and access management less costly. More importantly, virtual data rooms enable several deals to be conducted at the same time within a shorter period, which would be difficult to do with physical data rooms. No matter what kind of deal you’re preparing for — initial public offering, M&A, or investment banking round — data rooms are designed to ensure it’s conducted smoothly and rapidly.
Although sometimes wrongly labeled as “virtual data rooms,” the typical file-sharing products are not ready to support dealmakers. The main point is that only virtual data rooms provide enhanced security measures and the possibility of having absolute control of the environment.
A thorough preparation normally precedes the due diligence process. Nevertheless, in the modern business world, a deal can start when it is least expected. In such an intense environment, it is no surprise that most dealmakers trust to work with the best data rooms for M&A. In most cases, a virtual data room can be opened within a few minutes. Most virtual data rooms offer multilingual access, a mobile user interface, and many other convenient options that traditional data rooms can’t provide.
The use of M&A data rooms facilitates compliance with international legal requirements such as the Sarbanes-Oxley Act. Since the obligation to provide all the documents required by the law is usually a primary concern, most M&A virtual data room providers have legally compliant due-diligence index templates that help the seller with the document preparation phase of an M&A deal. Once documents are prepared and uploaded into the VDR, they become accessible to all potential buyers, and the system tracks every action for each document. After a deal is finished, both parties, sell-side and buy-side, get the DVD or Flash-drive archive of the deal documents accompanied by audit trail reports of their detailed activities. They can be used as evidence in case of legal dispute.
When all necessary information is uploaded, deal documents should be well-organized and named, so potential buyers can easily find them.
Throughout the deal, users can be continuously added, and virtual data room administrators can easily manage their permissions. Invite participants and assign their access permissions quickly, so bidders can begin and complete their due diligence sooner.
Insufficient or delayed due diligence processes are a very realistic and common risk when pursuing a deal. With iDeals virtual data room, dealmakers, and corporate executives can leverage cutting-edge technology to anticipate different scenarios in the accelerated pace of modern M&A deals. The iDeals platform enables them to: