Virtual deal rooms exist to solve some of the more inefficient and draconian processes that are inherent to mergers and acquisitions. Previously, these types of deals forced companies to constantly meet in person, create a huge pile of legal documents and contracts, and pour over these through an often months-long process that required a lot of back and forth between both parties. Now, with a virtual deal room, companies can allow all of the essential parties, including buyers, sellers, and company stakeholders, to work together under a single platform and a standardized set of processes, which makes the entire process of mergers and acquisitions far more modern and efficient.
With that in mind, here is what a virtual data room is and why you should be using one to bring your mergers and acquisitions into the 21s century.
Using a virtual deal room
A deal room is a cloud-based platform that allows you to store business data and share it with other parties in a secure setting. To enable this possibility, deal rooms use several layers of encryption and have many different features that help to raise productivity during mergers and acquisitions, as well as other types of deals such as fundraising, IPOs, and strategic business partnerships. For example, deal rooms allow for things such as user-based permissions, which sets the data room so that only certain users have access to documents or the ability to share, edit, or view certain documents. All in all, this makes for a safer and more secure workflow when hammering out deals.
Why you need to use a virtual deal room
There are various reasons why a deal room can help your business improve its operations, particularly during a merger or acquisition. To make these improvements, here are four ways a virtual deal room can help you.
Secure document storage
One of the biggest threats when it comes to online business transactions is cybercrime. In fact, cybercrime has become an increasingly big threat, with 80% of IT security professionals saying their organizations lack sufficient protection against cyberattacks. To mitigate these, a virtual deal room can help to encrypt all of your files so that they are safe from cybercriminals. There is also a multi-step authentication process to access a deal room, making it much more difficult for criminals to gain access to sensitive data such as intellectual property or financial disclosure forms.
It is quite clear that communication breakdown is one of the biggest hurdles to signing deals. When trying to hammer out a deal, there is so much back and forth required, including making changes to contracts and getting approvals on various stages of deal-making process. Using a virtual deal room, you can use the software to collaborate on these changes and create a flow of communication between both parties that is documented in a central hub. You can also set notifications so that relevant parties are informed when changes are requested or made to a document.
Organization is imperative to any sort of business transaction. Fortunately, a virtual deal room has tools to help you keep organized during the dealmaking process. For one, it provides a central hub so that you can organize and manage all of your documents, and track which file formats they are in. This makes it easier so that you do not have to hunt through emails or poorly named folders on a desktop or company cloud storage to find the type of document you are looking for. With advanced search functionality, you can easily look through a virtual deal room to see what you are looking for and place it in a place where everyone knows to look for it.
One of the most convenient parts of a virtual deal room is their dashboard. Within this dashboard, you can see an overview of the entirety of the merger and acquisition process. This can show you how much time has been spent in each document, what users have accessed which documents at what time, and where the bottlenecks in the dealmaking process have occurred. This way, you can see how different parties are engaging with the various facts of the deals, and get a better handle on tracking the merger and acquisitions process to see what can be improved and what areas need to be revaluated.