Tips to Prepare a VDR for a Smooth M&A

A merger or acquisition is a challenging time for any business. When you are trying to find a way to combine the best parts of two companies, you need to develop the right plans and strategies. Take a look at the main tips on how to prepare a VDR for a smooth M&A.

How to Make Your M&A Process Smooth?

Companies have hundreds of versions of different technologies, platforms, and programs to choose from to help them run their business more efficiently. This usually means that the merging companies do not run on the same platforms or programs. Even if they use the same platforms, the transfer of data and information may result in loss of details or omissions if not done properly.

Organizations are constantly evolving, adapting to market changes and the needs of their customers. Mergers and acquisitions are among the biggest organizational changes. Tax reforms, the specifics of the regulatory climate in different countries, and growing cash reserves reinforce optimism among large international companies that the M&A trend, which has been going on for many years, continues. There are many reasons why M&A deals fail. One of them is the underestimation of "soft" factors.

Whether your strategic goals are to expand, acquire new technologies, or enter new markets, the virtual data room can help you achieve them through M&A deals, divestments, or joint ventures. In the case of performing M&A transactions, the virtual data room will help you to:

  • conduct a portfolio assessment to determine the most optimal growth strategy and competitive advantages;
  • evaluate the strategic compatibility of the acquired business by identifying market opportunities and potential synergies;
  • conduct an independent review of finance, tax, business and operations, compliance, IT systems, and cybersecurity;
  • determine the optimal strategy for asset valuation and access to capital markets to raise financing;
  • realize the deal.
  • What Are the Main Tips to Prepare a VDR for a Smooth M&A?

    M&A deals, as well as asset sales and joint ventures, can provide significant growth for your business, and a clear strategy, selection of the right facility, thorough due diligence, and smooth integration are critical. Competition is another reason why companies resort to restructuring mechanisms. With the intensification of competition, companies are forced to look for more and more opportunities to enter new markets and increase their own competitiveness and efficiency. Thus, through mergers (acquisitions) and business integration of the target company, the buyer receives the easiest and fastest way to expand his own business.

    Among the main tips on how to prepare a virtual data room for smooth M&A transactions are:

    1. Design a schematic of the VDR beforehand.
    2. Ensure the relevant people have access.
    3. Put together a logical filing system.
    4. Add relevant documents: Make sure they are up-to-date.
    5. Interact continuously with your VDR.

    Besides, another factor to mention when preparing a virtual data room for a smooth M&A is the level of concentration within the industry in which the firm operates and whose owners are in the process of choosing between an IPO and an M&A. In industries with relatively high concentration (there are fewer firms and they tend to be larger), takeovers are less common than in industries composed of small firms since the environment of a highly concentrated industry has less potential for further consolidation. Moreover, government antitrust regulation of highly concentrated industries tends to be more stringent, making acquisitions more difficult.