Why companies Need a Virtual Data Room for M&A


What are mergers and acquisitions? It is a business transaction that involves the sale or merger of two companies into one. To accomplish this, companies must carefully examine each other’s financial, legal, and other information. This long and tedious process of exchanging large amounts of documents was once a real problem. But now, with the help of a virtual data room, most of the problems associated with M&A can easily be solved. In this article, we’ll explain why VDRs are necessary for organizations during M&A transactions and how they can help.

Physical Data Room vs Virtual Data Room

Time is of the essence, and so sticking with the same old method when tons of new ones have been invented is at least very conservative, and at most detrimental to your company’s success and productivity. Traditional methods of storing and sharing documents like a physical data room entail many additional challenges. Not only company management needs access to documents, but also other specialists like lawyers, accountants, and bankers. Security guards and physical vault administrators are not able to control the entire situation, which increases the risk of document loss or leakage, as well as complete management chaos. It also entails additional time spent on travel and searching for the right documents and monetary costs.

The virtual data room, in its turn, can accommodate in its space not only an unlimited number of documents but also an unlimited number of users who can quickly find and study the necessary documents in real-time. This automatically saves time for your clients and your company as everything can be done remotely. Also, there is no need to spend money on the maintenance of the physical premises and all the employees who work there, plus materials.

Why do companies need a virtual data room for M&A?

Initially, the main task of the VDR was precisely in supporting the M&A process and due diligence, this remains one of its main purposes to this day. These programs have been designed specifically to simplify all possible processes and meet the needs of all users, it does this using the following features:

  • Persons, profiles, and access rights

Data room administrators are endowed with additional security measures called document access control. That is, in this way, the manager himself decides to whom to provide access to certain documents. This helps keep the workspace clean and organized, protects against data leaks, and reduces the likelihood of third-party distractions.

  • Corrections and replacements

If you need to make any updates or edits to the documents after the meeting, with the help of the WDR you can easily do this. The program also helps to notify all other participants in the data room about changes.

  • Select document

Company executives can create several rooms, each of which will correspond to a certain stage of the transaction. There is no need to upload and show to other users all files at once. You can upload the documents that are needed for the first stage, if everything goes well, proceed to the next, providing the next package of documents.

  • Terms

VDR administrators have the right to set the validity period of documents upon the expiration of which it becomes unavailable. By the same principle, you can set the period of stay of unauthorized users inside the VDR, after which the user will be automatically removed from the space.