5 tips to M&A success in the here and now
by Abby Roberts, Director Content
by Abby Roberts, Director Content
Three months or less. That’s the amount of time most M&A professionals think due diligence will take by 2022, in large part driven by technology advances, according to a global DatasiteOne survey.
For M&A professionals in the weeds, however, 2022 can sound a long way off. That’s why we sorted through the findings from our global future of due diligence survey to distill how technology can add value to the due diligence process in the here and now.
The bottom line: understanding the benefits technology can provide and choosing your due diligence app wisely can contribute greatly to M&A success. Here are five immediate takeaways from our survey:
1. Focus on continued preparedness
Both buy- and sell-side are shifting from seeing due diligence as a short term, transaction-based process to viewing it as an embedded part of the entire M&A lifecycle. That’s why 23% of global deal professionals cite the shift to continued preparedness as a critical driver behind due diligence change.
In the short term, this means taking advantage of due diligence app prep and build times to gather and organize documents in advance, so you’re ready to launch quickly. In the mid- to long-term, many corporates and private equity are shifting to continuous technology partnerships, as a way to avoid the administrative scramble and knowledge transfer losses associated with the “Stop. Start.” transactional approach.
2. Tighten deal communication hatches
With the advent of stricter data privacy rules such as GDPR, dealmakers can no longer play fast and loose with deal communications. And in fact, a whopping 48% of dealmakers globally see unsecure transmittal practices via email and the like as the top challenge facing secure data sharing and collaboration practices today.
Collaboration tools within the due diligence app such as Q&A are gaining traction as a way to reduce unsecure transmittal practices, make an otherwise messy, manual process organized and on track, and provide a more robust audit trail of deal communications.
The best part? Research shows when Q&A is centralized in the due diligence app it increases buyer engagement by 135+ percent.
3. Stay in peak app condition
With deal teams regularly stretching into the hundreds, documents in the thousands and tasks populating like bunnies, the sheer size and scale of the modern M&A transaction can be overwhelming. Therefore, it should come as no surprise that 30% of dealmakers see document self-organization and project management as the most significant due diligence challenge technology will help solve.
The truth is, many of these tools already exist within the due diligence app – and are being added to on an almost daily basis. To take advantage of existing technology, ensure your entire deal team is fully trained on the app prior to launching a process or participating in it on the buy-side. Refresh regularly and lean on your technology partner’s project management team for support.
4. Expedite contract review, analysis and redaction
Contract review, analysis and redaction may be the most admin and lawyer-heavy part of the due diligence process. That’s why a resounding 29% of global dealmakers picked contract review, analysis and redaction as the biggest due diligence problem technology will help fix.
A number of law firms and technology companies are working hard on automating the manual parts of contract review, so professionals can focus on thought work, not finger work. Know your options and stay current.
5. Track everything
Increasingly intricate national security, antitrust and data privacy regulations combined with rising costs from M&A-related litigation have created an environment where detailed, page-level tracking of document views during due diligence is a critical business necessity for both buyer and seller. That’s why 11% of dealmakers see audit trails as the most important problem technology helps solve in the due diligence process.
Audit trails are already available on most due diligence apps, with varying degrees of specificity. Make sure you fully understand the different functionality provided by each technology provider and look at using tools such as Q&A inside the data room to ensure deal communications get tracked as well.