Although the data is hard to pin down, the body of research suggests that around half of mergers and acquisitions fail to add any value. While this might make uncomfortable reading for any company about to undergo the M&A process, it is a timely reminder of the importance of the due diligence process and undergoing a thorough audit and evaluation process before anything is signed.
Often with a merger or acquisition, this process is complicated by the sheer amount of information that has to be absorbed by both sides before they can truly evaluate the potential profitability and post-merger integration that is so critical in a successful deal.
In recent years, virtual data rooms have emerged as a powerful ally in this process and they are increasingly being used throughout due diligence to allow both sides to focus on the deal and make a more informed judgment.
But while the technology helps, virtual data rooms also need the right human input if they are to be a success, and there are a number of areas where companies can better prepare their virtual data rooms for the due diligence process by getting the right people on board and managing them in the right way:
Mutual Buy-in
One of the biggest failures not just for virtual data rooms, but for corporate technology in general, is not having buy-in from all stakeholders or not having processes in place to ensure the technology is used consistently.
Both sides of the deal need to be involved in the decision-making process when it comes to deciding on the vendor and planning how the virtual data room will be managed and operated so that all teams are using it in the same way. Buy-in from both sides will ensure this level of consistency and ensure that both sides aren’t using different processes in the due diligence process.
Give it Enough Time
As you might expect, the preparation of the data room and the assembly of all documentation can be a time-intensive process. When choosing a virtual data room provider, ensure that you are getting a level of service that will support this process and take the strain of the administration process to allow you to focus on the deal.
Plan for Common Issues
The virtual data room can throw a spotlight on some of the most common issues that hold up a successful M&A process and it’s important to prepare for these events before they happen. Some of the most common issues can include unsigned documents, minutes or patents, incorrect legal information, or even incomplete documents that are vital for the deal to proceed.
By investing time in the correct preparation of the virtual data room, many of these issues can be caught and resolved quickly and efficiently during the due diligence process without holding up the deal.
Of course, there are many factors that can influence the long-term success of a deal, but by investing the time and resources in preparing a virtual data room for the due diligence process, you will give the deal its best chance of success.
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