M&A Transactions : The Impact of Due Diligence Data Room Software

Accurate records and proper data management are crucial to running a successful M&A deal. Due diligence is a critical phase of doing business related to data sharing. The process is extensive and requires much time, effort, and attention to detail. Let’s consider how to make it easier with a data room.

Online data room – a must-have for modern M&As

The deal management of M&A transactions is not so simple. It consists of several stages, including due diligence. The procedure for storing and structuring documents in the company’s due diligence analysis performance plays an important role. In such operations, the ability to quickly archive, delete or compare data is the right path to success. As a part of M&A due diligence, the investor regularly is interested in showing certain documents to his advisors (lawyers, tax advisors, and auditors). Therefore, these documents are often placed in a virtual data room. What is meant is that there is an originally real space on neutral ground, for example, a law firm, in which both parties can examine important documents undisturbed. In the meantime, however, this data room also exists virtually and is located “in the cloud” somewhere in a data center, together with the documents to be checked. There are several providers, and the most prominent are Intralinks, Merrill, Digify, Firmex, Drooms, etc. In addition, and often much more cost-effective, simple cloud solutions or a Dropbox are used. The choice of data room vendor stands or falls with the number of uploaded documents.

The implementation of the data room for M&A due diligence?

Setting up a due diligence data room is quite easy if you follow these simple steps:

  • Manage due diligence checklist in a system

The data room index lists documents that should be processed during a transaction. You should prepare all files and documents you upload to the data room for online due diligence.

  • Make a unique and authentic data naming system

Pay attention to the type of document. Use user-friendly names for files and documents on the platform.

  • Set up your secure data room

The structure should be convenient and understandable for users participating in the verification process. If for some reason, you need to develop the structure yourself, you must do it before you start uploading files and documents. A secure virtual data room is ideal for storing all uploaded files in the cloud. The data is, therefore, available from anywhere and at any time. However, the proper organization and administration will help you to control all processes in the data room

  • Download the required data

The data stored in the data room should reflect the actual status of things in the company. For investors and other partners to receive reliable and up-to-date information, it is necessary to correct all knowledge and data in the submitted documents.

  • Invite users and reviewers

One of the final stages is inviting users to participate in the data room’s due diligence. The system administrator sends a secure invitation link that allows members access to the data room. Before access, users follow two-factor authentication.