Speed, accuracy and confidentiality are crucial to a successful deal. James Harris talks to Ansarada’s Harry Gill about how technology is aiding M&A

With increased cross-border activity and a shift towards mid-market deals, there has been a surge in the use of a virtual data room (VDR) within the due diligence of M&A transactions.

Such data rooms allow multiple parties the access to confidential information through a secure platform, available anywhere in the world via a web browser.

Ansarada’s Head of Business Development (Europe), Harry Gill, says: ‘It is important to utilise the correct technology to facilitate the due diligence process in M&A deals. A VDR can speed up the due diligence process, reduce costs, increase sell side intelligence and dramatically reduce the risk of security breaches.’

Classified information

In a market place with continual exchange of confidential information, M&A professionals are increasingly becoming sensitive to the way their client documentation is handled and disclosed to third parties. Gill says that ‘security, confidentiality and protection of information during transactions are of the utmost importance’.

M&A is not all about boardroom negotiations. It also creates an unholy administrative headache. In an M&A deal with several bidders requiring controlled access to documentation and quick-fire questions and answers, the vendor has their work cut out.

Gill says, ‘Collating documentation from the seller and managing the controlled and secure disclosure to several parties simultaneously throughout the process can be difficult. A VDR should relieve some of the headache since it is simple to set up, quick to define multiple access rights, and easy to administer during the deal.’

Moreover, a VDR can track all the questions, and prioritise the ones that are most pressing. As all questions are contained in the data room, there’s no chance of stray e-mails finding themselves in the wrong hands. Gill comments: ‘Traditionally this process can be time consuming, which is why the ability to track questions and answers through a clear and simple work flow is vital without leaving information outside the data room to create headaches later.’

Knowledge is power

Another important aspect of the service is the information it provides to the seller. Gill observes: ‘Intelligent reporting on due diligence activities conducted by the buyer is vital to give the seller the inside track. It provides a real impression of what aspects of the business potential buyers are interested in for negotiations, which is why it is important to track all document and user activity.’

With the vagaries of the market in 2009, when larger deals became less common, VDRs are still seeing an increase in use within the mid-market and distressed deals. ‘Before, VDRs would typically be used for M&A transactions which had large deal values, involving multiple bidders and with global interest. However, recently we have found firms looking to VDRs across all deal sizes.’

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