VDR for mergers & acquisitions

Mergers & Acquisitions (M&A) are a type of deal that is increasingly reaching the countries around the world. It is, indeed, a global thing. The number of transactions in which medium-sized companies are involved is growing steadily. It is not just the importance of so-called M & A procedure that is increasing, but also the professionalism, frequency, and speed of such SME transactions. 

Besides, a new market segment is emerging, specializing in corporate sales during the crisis. The term “M & A” includes the translation “mergers and acquisitions” as well as the upstream and downstream processes. Typically, an M & A process goes through five stages and concludes with the sale. These are difficult to separate in time and sometimes even run parallel.

Possible challenges in succession planning and during the crisis

Basically, the success of an M & A project depends on the current operating result and, if applicable, the crisis status of the company to be divested. The more advanced a crisis stage is already, the more complex the investor or successor search. Depending on the economic situation, different challenges have to be mastered. A professional and structured process is indispensable in dealing with these challenges.

Virtual Data Room

The virtual data room (VDR) is a web-based electronic safe in which documents of all kinds can be set. It keeps these documents safe because only authorized persons have access via the Internet. Some providers guarantee this security telling that they setup VDR in the respective high-security areas of the commissioned providers with certified server landscapes.

Since access is via an Internet browser, there is no need to install software or invest in hardware.

The setup of the data space takes over the respective provider, without that it requires a considerable time lead. Once the data room exists, the user receives an e-mail message that allows logging traditionally. A virtual data room should have the same basic data structure for each property in the portfolio and lead to lower levels of aggregation below it. This facilitates surfing through the information offered and greatly enhances the willingness of the experts in charge of viewing the data to deal with the portfolio.

Talking about the positive moments, VDRs save a considerable amount of time for both the seller and buyer who decided to set up vdr and protect critical data. The second important thing is that information transfer can easily be controlled. Many users already estimated the feature that allows one to set up individual rights of inspection, on the one hand, and the individual property rights per document, on the other hand. 

Practical people who love details and reporting would appreciate the fact that all the actions are documented. Besides, VDRs let the users evaluate the prospective customer activities, assess the interests, view spatially unbound equality of all interested parties. A virtual data room enables a structured approach to the complexity of M & A processes and speeds up the entire process. Of course, the company itself has its own access to the virtual data room with access to all documents. Upon completion of the M & A Transaction, the Company will be provided with a volume of information about all actions in the Dataroom.

As it always happens, there are some pitfalls as well. With all the advantages of the system, however, a certain disadvantage of the virtual data space should not be concealed. According to the current state of the art, it is impossible to prevent the computer surface from being photographed and a usable image of the user interface being recorded. Since the user of the virtual method is not sitting in a monitored room, but in his own office, there is, therefore, a slight risk of abuse. 

Therefore, if you want to prevent any individual documents from going outside at all costs, the conventional physical data space should continue to offer a bit more privacy. However, anyone who has ever participated in a due diligence process in a physical data room knows that deliberate abuse cannot be ruled out. After all, why else will documents that have been made available disappear again and again, without it being possible to clarify afterward who is responsible for this?

However, at least as important is the function of the data room as a highly secure communication platform for complex real estate transactions. Because the exchange of information and the inspection of stored documents takes place within a secure and encrypted Internet connection. This considerably reduces the risk of espionage compared to the usual sending of e-mails with attached draft contracts.

The versioning function of some vendors also ensures that every changed version is stored automatically and unalterably during contract negotiations. Also, a history display usually ensures that every minute touch of a file is recorded, so that it is comprehensible at any time who has done what with which document or is currently doing it. 

The establishment of a so-called watch list results so that the user will receive a notification when other users are processing one of the documents on the watch list. If a multi-party bidding process is to be negotiated at the same time, this can be organized within a single data room by granting different access rights to different subsections. This can also be concealed without further ado, that even with other interested parties or with whom negotiations are conducted.