Dynamic development of high technologies and automation, expansion of opportunities for access to information – all this requires a flexible response to new changes, new knowledge, and software. A great example is Virtual Data Room as an effective tool for implementing equal access to information.
The analysis of Digital Data Room trends in the M&A market
In the global arena, mergers and acquisitions – M&A – is one of the tools of globalization both at the level of international brand formation, information sharing, and creation of elements of political influence and as a means of accumulating global capital. In the international direct investment market, about 80% of funds are spent not on the creation of new companies and industries, but on the acquisition of existing companies. The global M&A market is characterized by waves of surges and declines in the number and volume of transactions.
Combining a small company with a larger one can increase financial strength, market share, and business activity, allowing a new company to grow and expand in its sector. Nowadays, M&A is the most common type of business.
Today in the IT environment there is a trend to create a small innovative business (startups) and its rapid sale to Internet giants, which forms the statistics of small acquisitions. For example, the holding company Alphabet Inc. Is the parent company of Google Inc. with a capitalization at the end of August 2019 of $ 859 billion over 18 and a half years, acquired 227 companies, Microsoft – 230 companies, Facebook – 76, which at the same time bought WhatsApp Inc. for $ 19 billion, which puts this agreement in the category of particularly large.
Therefore, modern IT security solutions take these requirements into account by using modern encryption technologies when establishing a connection to the M&A data room in advance.
The use of a Digital Data Room opens up a whole range of possibilities to supplement and support the due diligence process in a meaningful way. This solution meets the wish of a seller to make the necessary documents available to potential buyers for an examination as discreetly as possible, as well as the need to make the group of participants as broad and international as possible in order to achieve correspondingly high sales revenue.
How does it work?
With the help of a Virtual Data Room, the necessary and important collaboration between these participants across time and location limits can be facilitated. The short-term construction of such a digital data room, which is possible with the help of this technology, and the ability to make current content available to all parties with access at the same time, often lead to a significant shortening of the due diligence cycle. This also without accepting restrictions in the quality and quantity of the documents to be made available with regard to possible liability claims
Finally, it should be noted that with the help of solutions from the area of content management, and collaboration, other aspects of M&A activities, such as company valuation, contract drafting, and post-merger integration, can be simplified. This can contribute to a considerable increase in efficiency and shortening the overall process of buying or selling a company
How to choose a good Data Room Provider?
When selecting a provider for the VDR, the following security points should be noted:
- Blocking of the “Print” button
- Functionality and security of the Q&A section (Questions & Answers)
- Dynamic watermark for the documents in the data room
- Data encryption and location of the Data Center
- Virus protection
- Multi-factor authentication when registering participants
- Rights management of participants in the VDR.