Maximizing the Benefits of a Data Room for M&A Due Diligence

The effectiveness of the management of business transactions and due diligence depends not least on the prompt and high-quality formation of electronic documents, control over their execution, secure collaboration, and quick data exchange. So, how to maximize the deal benefits with the M&A data room software?

Virtua data room in the M&A due diligence

Every year the number of companies that resort to resolving disputes in court increases, so, at first glance, a familiar counterparty with whom your organization cooperated earlier or just started cooperation may challenge the transaction related to the ownership right while recognizing the company bankrupt. To avoid such a situation, the company’s management must carefully conduct a comprehensive check of the counterparty when buying/selling assets, bankruptcy proceedings or obtaining a loan. When concluding a transaction, a detailed assessment of its economic feasibility, the conditions themselves, as well as possible financial and legal risks should be carried out. The M&A deal is not an exception. The due diligence procedure plays one of the leading roles in its workflow.

M&A transactions are a somewhat complex process. A comprehensive assessment of all elements that directly and indirectly affect the mergers and acquisitions process is required to build effective strategies for their implementation and successful closure, especially in emerging markets. Conducting due diligence implies implementing an investment study, which establishes the risks of a proposed capital transaction and develops measures to manage them.

Primary due diligent electronic documents at enterprises are created in many information systems, from which they are subsequently uploaded to external exchange services for signing by counterparties. Today, the software product market offers various software solutions that can simplify such operations and automate some routine activities. Virtual data room (VDR) like iDeals is one of them.

How does it work?

During M&A due diligence procedure, the auditor has several specific documents inherent in the investigation process. All these documents have their routes, the data room, in turn, must ensure the automated passage of these routes, the formation of documents, and easy collaboration. To store in the electronic archive only those documents that have the signatures of both Parties, the directory “Status of electronic documents for download” is filled out. This setting will ensure that only approved and signed documents are uploaded.

So, iDeals VDR provides customers with the following capabilities:

  • keeping logs of registration and control of the execution of documents;
  • data repository;
  • support for document templates, linked documents, versions and subversions;
  • document search by attributes, full-text search;
  • document management – all types of routing, automatic sending of messages, exchange of messages and orders
  • strict separation of powers in the system, role support, logging and auditing of user actions;
  • formation of the necessary reports, particularly statistical reports on the organization’s record keeping.

The card of each uploaded document contains a set of necessary details, which ensures a simple and quick search. Also, it has an archive of electronic signatures and the document file itself. By the way, the layered organization of data delimits information by subject, increases the convenience of work and allows connecting data from other sources. The client-server architecture makes using the system from any computer or tablet possible without installing software. Expandable analytical tools increase the accuracy of problem-solving and save time. In this case, the interaction between divisions and specialists was not based on available data sets but on transferred documents.