Data Rooms for M&A

The importance of virtual data rooms for M&A

Over the last few years, data rooms became a ground part of Mergers and Acquisitions. This technology took away all the hassle with endless papers and provided businesses with a convenient workspace. Using a VDR, companies can hold M&A in almost no time-saving costs and efforts.

Mostly a virtual data room is utilized for the due diligence part of Mergers and Acquisitions. It contains all the documents related to the business of the sell-side. The easy access to this data allows potential buyers to evaluate assets and understand all the liabilities, risks and obligations as quickly as possible.

It is especially crucial in the case with the acquisition of small and relatively new businesses to offer buyers an opportunity to study all the documents meticulously. If these companies have never taken part in trading on public markets, buyers can’t find the needed information in publicly available resources. Therefore, they will want to know as much as possible.

Virtual data rooms save costs

During the old-fashioned way of holding M&A, the seller side has to spend a lot of money to present all the needed files to the potential buyer in a timely and convenient manner. The buying side also has to go through expenses to study the information – someone has to travel to the seller and do the job.

Using data rooms, both sides have to spend no more than the fee the VDR provider asks. Also, the seller side will need to assemble the documents. It takes time so that this process can be counted as an expense, too. But considering the cost of the data room and manager’s work, it is still a significantly smaller amount of money than in the case with the old-school approach.

Both sides waste less time

To view all documents in the data room, no one needs to travel. All members that have access to the storage can enter it from anywhere anytime. Most VDR providers support all devices and platforms to offer effortless access. Therefore, the process that could take weeks now can be carried out in just a few days.

The data room can be assembled for M&A in just a couple of hours. Simply upload all the documents with drag and drop feature. And if you already have an established structure of folders and subfolders, you will spend even less time setting up the VDR. Then you need to invite the potential buyers to the storage, and you’re ready to go.

data room m&a

Enhanced security

VDR providers protect both the storage and data transfer ways using the most reliable encryption out there. There is no way any information gets stolen or corrupted. The seller side can be sure that all the documents are entirely safe and inaccessible for unauthorized individuals.

Additionally, the owner of the virtual data room has precise control over the level of access other parties have. The administrator can manage who can only view the files, and who can edit, print or even share them. This feature ensures extra security for sensitive corporate documents.

Complete transparency for the seller side

While all potential buyers can’t see each other in the data room, the seller side has a clear picture of what’s going on. The administrator of the VDR can see the actions of every user and the amount of time each member spent studying documents. The data is recorded precisely to seconds and pages. Analyzing these stats, the seller side can plan future moves better.