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Assessing your specific requirements for due diligence process

Due diligence is often carried out with the help of external service providers like data room platforms. The more detailed and longer it takes, the more expensive the process becomes. Let’s find out how to make the process more manageable with the help of data rooms and what are the basic requirements to them. 

Virtual data room: due diligence before the next digital revolution

Due diligence is a necessary step in buying or selling a business. It refers to thoroughly examining and evaluating all relevant aspects of a company to identify potential risks, opportunities, and real value. All financial, legal, operational, and strategic information and documents are carefully analyzed during due diligence. The primary purpose of conducting financial due diligence is to form a complete picture of the actual financial condition of the company, the physical presence of assets, all current and potential liabilities, as well as all tax, financial, and investment risks that can significantly worsen the financial condition company in the foreseeable future. The aim is to comprehensively understand the company and its potential impact on the transaction process. 

The due diligence process can be complex and often involves a flood of information. Therefore, virtual data rooms were designed to ensure simplicity and comprehensibility in business operations. So, let’s consider how to conduct financial due diligence in a secure virtual workspace. The digital data room allows you to collect all relevant documents and information in one place so that you and everyone involved can easily access them. No more endless e-mails or confusing file folders; everything is structured, organized, and secure. The company gets a file storage system organized as a folder structure: just like on a personal computer. The service provider guarantees the safety of the data. Reservation takes place on the side of the data center, so you don’t have to worry about information availability and storage security.

Why is data room essential for the due diligence process: key points

Users can upload their files to the data room server, edit them and upload them back. A simple web interface is enough to perform all the actions. The platform is built from hundreds or even thousands of servers, as it is necessary to ensure data backup and service operation in case of failures. Modern data room providers use the principle of territorial distribution of data processing centers. It avoids problems with the process of the cloud during emergencies.

Here are some other benefits of the transition due diligence process to the virtual data rooms:

  • less time is spent on coordinating and signing documents;
  • all processes related to due diligence document flow become more transparent because the system instantly shows information about who, what, and when issued and signed;
  • tasks of organization and discipline, delivery of documents are solved faster;
  • the risks of errors are reduced because it is easy to track incorrectly completed electronic documents in electronic form;
  • employees of the organization will not be able to read and fix those files to which they do not have access, which increases confidentiality;
  • statistics of various actions with documents is maintained and saved automatically;
  • provides a high level of data security compared with paper media.

Data rooms have helped enable the freedom to work remotely, collaboration across globally distributed teams, integration between our favorite apps, and more secure backup that doesn’t rely on physical storage. This digital platform transfers and stores data on third-party remote storage systems, eliminating the need for your own data infrastructure.

How to Follow the Horizontal Merger Guidelines for a Successful M&A Transaction

Horizontal M&A deals are used by firms seeking economies of scale and reducing market competition. This article will highlight the common guideline steps for a successful transaction. 

The prospects of the horizontal merger

The economic essence of merger and acquisition (M&A) operations is that the integration processes, which aim at achieving competitive strategic advantages within the change management framework, are characterized by high dynamics and are carried out through the mechanisms of reorganization, restructuring, and the establishment of corporate control. Such transactions can provide economies of scale from marketing centralization, for example, by combining efforts and providing flexibility, the ability to offer distributors a wide range of products, use of promotional materials.

A horizontal merger combines two or more companies that produce the same products or provide the same services. As a result, the combined company becomes more competitive, allowing you to connect market shares, experience, and expertise while reducing costs, for example, for the management staff. The horizontal merger requires increased attention from regulatory authorities. Therefore, regulatory and legal reviews of mergers and acquisitions of this type should be carried out with particular care.

Stages of the horizontal merger: how to structure a deal correctly?

They must first be properly structured to minimize the risks of horizontal mergers. We are talking about the evaluation of M&A transactions from different points of view – legal, economic, tax, etc., followed by an analysis of weaknesses and their subsequent elimination, and includes the following actions:

  • legal analysis – a detailed analysis of all stages of the transaction for compliance with the law, assessment of possible risks, development of a detailed plan for the implementation of all necessary operations, support in the preparation of the required documents, their legal assessment;
  • tax analysis – assessment of the transaction in terms of tax legislation, including all countries and regions to which the newly formed legal entity will be related, selection of the optimal payment model for the transaction, calculation of the amount of taxes that will need to be paid upon its completion, selection of the form of taxation for the structure being created, providing advice on various issues that arise in the process of making a transaction;
  • financial analysis – checking the compliance of the transaction with the current legislation in the field of finance, assessing the assets and liabilities of all parties involved in the merger or acquisition process, assessing the financial capabilities of the future company, choosing a merger financing model, consulting on various issues related to the procedure.

As seen from the points listed above, the evaluation of horizontal M&A transactions is a serious complex event that allows you to assess how the planned merger will benefit each of the parties, what risks threaten and how they can be minimized.

Virtual data room: arrange horizontal M&A efficiently

Support for M&A horizontal transactions includes the full range of necessary services: risk analysis of the acquired asset, development of an optimal mechanism for concluding a transaction, support for negotiations between the parties, preparation and verification of all documents that will be needed to complete a transaction, control over the signing of an agreement and evaluation of its results. Today all these activities can be easily optimized in a data room software for organizing secure business collaboration.

The data room allows you to automate all processes related to contractual activities – ensuring the structured storage of contracts and organizing joint work on their coordination and control over execution.

Staying Ahead of the Game with Digital Data Room

This article will focus on a virtual data room technology that connects people, organizations, equipment, and processes into a single workspace. This technology involves setting up and automating process control. Here is more about it. 

Virtual data room: stay competitive in the modern business world

Modern business is becoming increasingly dynamic, and the struggle for competitive advantages often becomes a pursuit of modern deal management and information technologies. In recent years, there has been a real information boom. Information systems are being introduced everywhere, and management is being automated. The motives here are different: both the influence of fashion and the desire to “keep up with the competitor,” and often, it is a completely understandable desire of the company’s management to introduce an effective and modern management system to reduce transaction costs, improve logistics and speed up business processes. So, how to automate your business workflows?

Information is the most valuable asset in the digital age. But you can only use this value if you also manage this information securely. With virtual data room software, you start at this core of digitization. It gives you an overview of the data situation, sets up automatisms that increase your efficiency, and you have the certainty that you are complying with all legal standards. 

The common data room benefits the business

The basis of the online data room is the creation of business process regulations, subsequent monitoring, and continuous search for modernization solutions. It is not a one-time tool that, when implemented, helps to optimize processes but a system of ongoing improvement and control of employees’ work. The program is not focused on the general work of the purchasing sales or technical support department. Data room objects are sales, customer support, supply management, etc. Based on this principle, the work on reengineering business processes is built.

So, data room software is a win-win solution for every modern company thanks to the following benefits:

  • High data security

Paper documents may only exist once. With backups and security copies, your files are protected in multiple ways and, therefore, safe from fire and water damage or burglary. In addition, by assigning access rights, only those who are authorized to do so can see the information. So if you use a data room, you should regulate the access rights. In principle, a cloud solution is also conceivable, within which you can have the server and storage space operated externally. But then you should check carefully whether the cloud provider is trustworthy and how the documents are protected against unauthorized access.

  • Efficient data management

Automation makes sense when business processes run faster as a result. All files flow together in one place through the data room system. It creates new possibilities for how you can handle your information. For example, configurable dashboards give you an overview of your data status and availability. With one click, you get all stored documents and data about your customers – regardless of the source of the files. 

  • Reporting

Automating accounting contracts facilitates the implementation of many operations by performing them automatically. So, when keeping records of contracts in the data room, the possibility of auto-filling the template is provided. 

  • Cost efficiency

From the point of view of increasing business efficiency, cloud solutions can be more profitable due to low initial costs, the possibility of a faster start of work in the system, and the uniformity and predictability of payments for using the solution. In the future, hybrid solutions will increasingly be used, with both a cloud component and components deployed on the organization’s infrastructure. 

Most Useful Pieces of Advice for Writing an Acquisition Announcement

A good acquisition announcement will grab the attention of reporters, editors, television producers, and others who will help spread the word about the business. So, this article will consider important tips to make it efficient. 

The essence of acquisition deal management

Mergers and acquisitions (M&A) is a vital element of the corporate strategy, economic, and business environment that allows companies to respond flexibly to growing global competition and rapidly evolving markets. The transaction’s success largely depends on management’s actions in the first hundred days after the announcement.

It is quite understandable that excessive attention is paid to the direct conclusion of the transaction. Nevertheless, it is very important to plan the sequence of the first steps in merging companies. The ill-conceived initial actions can become the main reason for the failure of even the most carefully prepared deal. During this period, the most important decisions are made, many of which cannot be reconsidered later. 

The acquisition of a company can be defined as the taking by one company of another under its control, management of it with the acquisition of absolute or partial ownership. The takeover of a company is often carried out by buying up all the shares of an enterprise on the stock exchange, which means the acquisition of this enterprise.

Tips on writing an acquisition announcement

An acquisition announcement is a short, non-advertising informational message. It is compiled for media editors and journalists. The subject of a press release can be a significant event, various events, or any other informational occasion. The main task of a press release is to communicate the news so that it will be of interest to media workers and that it is partially or completely published in most print publications and on the Internet.

The main requirement for such an announcement is the timeliness of its publication, so the placement of press releases should be carried out immediately before the proposed event or immediately after it. When deciding how to write an acquisition announcement, you need to decide on its timeliness since its relevance is an important factor. Sometimes the writing of an acquisition announcement and its publication must be ahead of the events they are talking about, and sometimes the other way around. Suppose the company plans to hold an important presentation or an open day. In that case, naturally, a press release should be published in advance to promote this event and attract as many targeted visitors as possible.

So, we have determined the basic and useful tips for writing an acquisition announcement:

  • The announcement’s headline is the first thing people notice, so it should be catchy and clear.
  • The introductory paragraph contains the shortest possible message about the article’s main topic – “time, place, action.”
  • Further, in the text of the announcement, more complete and detailed information about the described event is given. Do not overload the article with long sentences – this “stresses” the reader and can distract him from the main topic.

For the acquisition announcement to have the desired effect, you need to write it not according to the rules and canons of the classic approach of twenty years ago but as a selling text that focuses on the problem and offers its solution to the target audience. The main difference is that the structure may not fully correspond to the AIDA model but catch the reader’s attention and arouse his keen interest. The main rule, in this case, is preserved: a cool headline is 90% success.