M&A transactions open up opportunities for increasing capital, resources, and other important indicators of business performance. But how to organize a successful transaction, and what are the best ways to add value to the deal? Here is more about it.
Success factors in M&A transactions
As investment experts of companies say, the ultimate goal of any M&A transaction is to increase the value of the company. Preparing for a deal is a difficult and responsible process on which the continued existence of a business subsequently depends. To save money, the parties often neglect the opportunity to use professional legal and investment advisors. Such a position could potentially lead to a complete loss of control over the business and significant financial losses.
So, according to analysts, the success of M&A deals depends on two key factors:
- Value creation planning
The study shows that traditional planning is not always guaranteed a successful deal. For example, 92% of Buyers surveyed say they had a value creation plan in their last transaction, but only 61% of respondents say their last transaction was a success. Companies that initially prioritize value creation over branding achieve much better results. The analysts note that companies with successful deals and value additions have several common characteristics, including the use of value creation methodology, the implementation of transactions within the overall portfolio activity, and the analysis of the relevance of the transaction to strategic needs.
- Strategic planning
Getting the most out of M&A transactions results from serious strategic planning. Analysts note that “random” and spontaneous decisions do not bring any benefit in this area. Instead, all work must be within the strict framework of the company’s business strategy for buyers and sellers. Strategic M&A planning includes a comprehensive assessment of the object of the transaction, implementing a virtual data room that ensures a secure collaborative environment, engaging specialists, etc.
Digital data room – a competitive advantage in arranging M&A deal
To get ahead of competitors and turn the deal into a valuable asset by implementing a virtual data room is not a dream today. However, large companies worldwide are already implementing similar solutions and rebuilding processes, developing a single information space in the organization, where there is no division into departments and positions. Still, there is freedom of information and creativity for new ideas and projects.
The seller must organize the collection and preparation of documents for the company’s due diligence. In this case, the data room is the best alternative. A Digital data room is a universal full-packed business platform for ensuring secure virtual collaboration. Thus, the software can automate and simplify most business operations and workflows.
The common software features are:
- fast input of large volumes of documents;
- the ability to search for a document by position in the structure, attributes, content, and any related information;
- high level of electronic storage security provided by a set of information protection tools;
- real-time collaboration;
- creating reports;
- better data management.
The main goal for this deal room is to be structured and complete. Such an organization of the system facilitates the verification for the buyer and increases the degree of his confidence in the seller. The buyer must necessarily inform the seller of his expectations regarding the documents and information to be disclosed in the information room. In addition, almost always, there is a problem associated with the disclosure of documents containing trade secrets. With the data room, such documents can be transferred last, that is, immediately before the signing of the binding documents for the transaction.