Globally, over 62,000 M&A deals totalling over US$1.5tn were announced in 2021. A huge increase on 2020 and a figure that was fuelled by intense demand for technology, and both digital and data-driven assets.
So far, so good. But every M&A professional is acutely aware of the inconvenience (read, time spent, resources allocated and frustration felt) of a failed acquisition. The Harvard Business Review backed up what we're all painfully aware of - that the M&A failure rate is between 70% and 90%.
So why is it that such a large percentage of M&A deals fail? The answer depends on who you ask. Poor research, incomplete due diligence, lack or loss of focus, cultural fit issues, unrealistic expectations or poor management - take your pick. Of the myriad of reasons why an M&A deal goes south, the one aspect that is totally manageable is the efficient administration of digital assets (we're talking research documents and the digital output of due diligence) and communication of teams around those assets. On the face of it this may seem like a trivial aspect of an M&A deal, but in streamlining and efficiently managing all communications and collateral around a deal, the likelihood of a deals success increases exponentially.
Due diligence first and foremost
One of the reasons M&A practitioners say that they enjoy higher success rates is as a direct consequence of thorough due diligence. Stakeholders look as closely at what is in the virtual data room (VDR - more on that later) as closely as the look for what's *not* in there.
Managing the process of due diligence efficiently and providing (selective and secure) access to data will inevitably reduce delays at every step, from the LOI to the purchase agreement and beyond. Good due diligence helps reduce risk and contributes to making informed decisions by enhancing the quality of information available.
So with all the insight afforded by the output of due diligence, what tools can we use to further increase the possibility of success? Let's explore some of the ways effective administration and management of communications and digital assets contribute to reducing the propensity to fail.
The VDR as the epicentre of the M&A process.
Client portals such as Clinked, provide M&A professionals (and everyone involved in the process of the M&A), with everything needed to keep communication between parties flowing without obstruction, a platform for the secure sharing, reporting and management of digital assets, and critically, audit trail functionality to ensure success.
Virtual data room functionality
VDRs are critical to the successful management, storage, sharing and security of documents and other digital assets involved in the M&A process - they offer a plethora of benefits including:
Efficient document organization.
Ditch the tower of binders looming over your desk. VDRs such as those provided by Clinked offer greater accessibility, selective access and universal search functionality.
Bullet proof security
VDR accessibility exclusively for authorized team members and external stakeholders means that you'll have complete control over who can access your documents and digital assets. The security protocols used by Clinked are bank-grade with encrypted backups and additional security measures such as two-factor authentication, complex passwords and controlled user-based permissions - you just can't get better protection.
When choosing your VDR or custom client portal be sure to make security a priority. If you need a steer on what excellent security looks like in a platform, drop the team at Clinked a line - we're happy to help.
Audit trail functionality
Accessibility is great, but accountability is crucial. As a Super-Admin, Clinked's VDR will allow you to see who accessed, downloaded, forward or amended documents and digital assets, when, and from which device or IP address. Additionally, you'll have a supremely improved handle of version control with the ability to always access the most recent draft of any document.
- registered user identification / who's accessing assets
IP addresses and other details such as which device access was made from
a digital timestamp (the time and date activity occurred)
a summary of activities showing actions or amendments made by a specific user
The audit trail is critical in validating data entries and sources. It also helps with the detection of unauthorized access to sensitive data, the retrieval of lost files, legal compliance and promotes user accountability. Every business should have an audit trail.
Always in the loop
Because the VDR allows you to upload just about any media type, another important communication output can be stored for later reference and that is online video conferences. Services such as Zoom and Google Meet allow for the recording of video conferences between clients, teams and stakeholders. Often, these meetings are simply forgotten the minute all participants end the call - but what about recording those interactions and storing them in your VDR so that should you need to, you can go back and remind yourself of the detail around previous meetings.
Not being in of the loop because you were unable to attend a video conference at the time it happened isn't the barrier it once was. Now, you can watch, or conveniently, just listen to legacy meetings while you're on the train, in the shower or doing something that lets you simultaneously use your ears.
While the challenges of successfully managing M&As to completion are great, there are some simple aspects of the process that we can manage to increase the opportunities for success - efficient management of due diligence, clear and transparent communication, accountability and efficient interaction amongst all stakeholders.
It starts with having a solid process in place - that's exactly what a client portal like Clinked offers.
To find out more about how Clinked can boost your efficiency contact one of the team today.