The M&A process can be long and complex. Buying or selling a company requires meticulous planning, experienced professionals, and an appreciation of the deal dynamics involved in negotiations.
Companies that have not been involved in previous M&A transactions commonly make mistakes that result in mispricing, unfavourable terms or a failure to complete – which could have otherwise been avoided. This article describes the basic features of an effective online data room.
Attributes of the online data room
The selling company must establish a well-organised online data room in order to assist potential buyers with their substantial due diligence activities. At latest, it should be ready immediately after parties finalise indicative offers/letter of intent.
An effective data room should have the following:
- A database that is completely and correctly populated with all materials requested by the potential buyer as well as all documents referred to previously. This must be kept up to date.
- A logical table of contents or directory. This allows for efficient navigational capabilities. To further enhance this, your data room should have a search bar with text-search capabilities.
- The ability to bookmark certain documents and subdirectories.
- The ability to download and print documents (for offline review). This capability should only be authorised if an appropriate and comprehensive confidentiality agreement has been signed.
- Question-answer capabilities. This gives buyers the opportunity to ask the seller vital questions in order to clarify information.
- To ensure promptness, Q&A posts should be alerted via email notifications to both counsels involved. This feature also helps keep parties up to date on information. An experienced M&A firm can help to ensure that the data room runs smoothly, is correctly populated and that all parties are in the loop.
Management Advisors Pty Ltd is a highly sought after independent financial services firm and investment bank. Their team has extensive experience in initiating, sourcing and negotiating M&A transactions to completion.