Virtual data rooms for mergers and acquisitions (M&A) have become an increasingly vital part of the transaction process and have been used widely, not only in due diligence but across the whole deal timeline.
This article will explore the added value that virtual data rooms bring to the mergers and acquisitions process and demonstrate that far from just document storage and sharing, they offer a great deal of cost-saving and time-saving solutions to common M&A issues.
Global and Confidential Access
One of the main reasons for using a virtual data room is the ease of access to vital documentation that they offer, with comprehensive security measures that offer peace of mind. But how does this offer value?
Even in the very near past, the storage of M&A documentation was often confined to a single server-based in a physical location, meaning that to access the documents on it, stakeholders had to travel to the point of access.
Not only did this come with high travel costs, especially in international deals, but the length of the deal process was also often greatly increased. This led to additional costs associated with:
- Increases in fees paid to lawyers, accountants, and due diligence specialists that are working specifically on the deal
- Expenses associated with any debt or borrowing involved in the deal
- The opportunity cost of key company stakeholders being solely focussed on one area of the business for a prolonged period of time
By speeding up the deal process, virtual data rooms can help to eliminate some of these creeping costs traditionally associated with M&A transactions and add real value through the amount of time and energy saved simply by giving instant access to key documentation.
Beyond File Sharing
Of course, virtual data rooms capitalize on the benefits of the increased connectivity that the internet brings, and with this growth in connectivity has come a raft of file-sharing services such as Dropbox and Google Drive that allow people to exchange documents at the click of a button. So if this technology is easily and affordably available, where is the value offered by a virtual data room?
In assessing the true value of a virtual data room, it’s important to consider the service that is being offered that distinguishes it from being simply a file-sharing service to an essential part of the M&A process. Included in the cost of a virtual data room will often be additional specialist services, including:
- A dedicated deal co-ordinator that will manage the uploading of documentation and maintenance of the platform, giving key stakeholders the ability to focus on the deal and not get sidetracked by managing the administration of documents
- 24/7 support that is on hand to answer queries and solve issues whatever the time of day where the transaction is being worked on
- A highly secure infrastructure that ticks compliance boxes and gives both sides of the transaction peace of mind
The reason that virtual data rooms have become such an integral part of the M&A process is that their features and services are specifically catered to meet the unique and rigorous demands of the modern transaction process.
Their value comes not only from the time-saving elements associated with online file sharing, but from the added expertise they add to the deal process that helps to ensure a quick, efficient, and thorough transaction.