Exclusive data rooms for M&A and due diligence processes

Previously, it was believed that the main danger to corporate systems was posed by intruders penetrating them from the outside, and they learned how to successfully deal with such hacks. Now it becomes obvious that people from within can cause the greatest harm to a business.

The Mechanism of Mergers and Acquisitions of Companies

Analyzing the variety of approaches to defining the concepts of “merger” and “acquisition”, it is worth noting that this phenomenon is multifaceted. Most researchers, using and defining this definition, highlight certain aspects of this complex phenomenon depending on the goals, motives of enterprise integration, and the conditions of the external environment in which enterprises operate. In order for a merger or acquisition to be successful, it is necessary to check as well as:

  • to correctly choose the organizational form of the agreement;
  • to ensure clear compliance of the agreement with anti monopoly legislation;
  • to have enough financial resources for unification;
  • in the event of a merger, quickly and peacefully resolve the question of “who is in charge”;
  • to include not only senior but also middle management personnel in the merger process as quickly as possible.

The Mechanism of Due Diligence Processes

When the object of the transaction is determined, initial negotiations are held with the management of the target company, the interest of all parties to the transaction is discussed, and draft legal documents are prepared. Based on market research and preliminary study of the company object of the transaction, the buyer calculates the preliminary cost of the company object, which can be significantly adjusted in the future. To make the right mechanism for due diligence, it is recommended to:

  1. If you have the right to choose (if you chose a comprehensive check and not a quick test), order a consolidated balance.
  2. Check the level of financial commitment. Please note that the fact of having debts revealed during the audit (due diligence for business) is not a negative by default.
  3. A more informative indicator is the company’s credit rating (if applicable).
  4. Estimate the actual ratio of debt to equity.
  5. The amount of profit generated is more important than the total amount of borrowing.

Key Features of the Exclusive Data Room for M&A and Due Diligence

Exclusive data room for M&A allows the organization to centrally manage access rights to company documents that are downloaded by employees and external contractors. This solution allows you to revoke access rights, including those files that were downloaded to the devices of external users. There is the possibility of integration with corporate portals and web services.

Key features that users want to see in virtual data rooms for M&A and due diligence:

  • ease of uploading files to the system and sorting them into folders;
  • clear functionality for downloading documents and viewing them in the system;
  • differentiation of access rights to documents and restriction of a number of actions with documents (for example, a ban on printing or downloading from space);
  • the creation of joint workspaces and assignment of different levels of roles for participants.

Moreover, the entire history of the company’s activities is stored in the virtual data rooms. This means that all data loaded from any source is preserved. Therefore, moving from one user to another, archiving data, and changing the data storage horizon in the source system should not violate the basic principle of storing, managing, and exchanging data in VDR at all times.