Virtual Data Room Solutions for M&A

What is merger and acquisition (M&A)?

Mergers and acquisitions (M&A) is the general term that typically refers to a financial transaction that results in two or more companies combining their assets and liabilities. An M&A process is one of the fundamental instruments of strategic management, as it allows businesses to expand their influence, access new markets, and facilitate sustainable development.

  • M&A transaction definition

An M&A deal is a process that involves two or more businesses collaborating to combine their assets. This type of business transaction usually involves an escalated amount of documents and requires data room technology for successful execution. 

Historically, the M&A procedures took place in physical data rooms and conference spaces. They were heavily associated with time-consuming data analysis, spaced-out negotiations, and slow closing.

But with the introduction of virtual data rooms, M&A and many other financial transactions got a lot more streamlined and comfortable for all the interested parties. Further on, you will explore the particular advantages the data room market brought to the M&A scene and learn how to pick the most appropriate deal processing software for your business.

Merger Vs. Acquisition

While M&A transactions often go hand in hand and involve the attention of the same specialists, such as lawyers or investment bankers, there is a distinct difference between a merger and an acquisition.


A merger is a consensual decision of two or more businesses to combine their human resources, financials, and other assets to work towards a united goal. These processes involve reshaping the managerial and ownership structures to perform on an enterprise level, as well as confidential documents and staffing exchange. 

  • Merger example: In 2016, H.J. Heinz Co. and Kraft Foods Group merged into The Kraft Heinz Company in a nearly $100 billion deal.


An acquisition is usually a one-sided process that involves a larger business taking over the target company by its own initiative or during a competition with other interested parties. The acquiring company, or buyer, ultimately gains access to the target’s operations and management and proceeds to restructure.

  • Acquisition example: Google acquired Android for $50 million back in 2005 when it wasn’t at the same level of recognition as today.

Other M&A transactions also include but are not limited to unit purchases, management acquirements, consolidations, and others. But whichever is the case, every M&A deal tends to go through the same procedural phases.

5 Phases of an M&A transaction

Virtual data rooms became widely recognized as essential for M&A due to them providing users with an ability to access and manage confidential documents in a secure, equipped environment. But there are other aspects of the merger and acquisition process that largely benefit from data room technology.

due diligence phase of m&a
Due Diligence

The due diligence process is the most effort-consuming and essential stage of any M&A transaction. At this time, the sides access, analyze, share, and collaborate on various files, gather the required documents.

integration strategy stage of m&a
Integration Strategy

Integrational planning is a synergy process that builds off stakeholders’ communication. The parties must review confidential documents, outline developmental routes, and create a road map for all the forthcoming procedures.

strategy execution stage of m&a
Strategy Execution

To process the deal further, integration teams follow the approved plan step-by-step. This stage can be quite long, as the contributing professionals need to access immense amounts of documents.

project management stage of m&a
Project Management

Project managers are involved at each stage of the deal processing. They keep track of all the people and files, access workflow progress to make adjustments, and exchange documents with the key parties when needed.

change management stage of m&a
Change Management

In the final phase of the M&A process, HR specialists come in to set the new course for employee development, help employees comprehend the change, and make the necessary hires.

five m&a transaction stages

Key elements of a successful M&A transaction

Any merger or acquisition is a process that involves many people, documents, and underlying procedures. To make the transition as practical and goal-oriented as possible, M&A professionals align their operations with three fundamental concepts:

1. Transparency

The due diligence process alone circulates around large volumes of files, such as corporate records, financial statements, employee records, and other critical documents. Data handlers must closely monitor who, when, and how approaches the documents.

But at the same time, the access security has to allow sufficient transparency for the deal to go through smoothly. Please note that it was a lot harder to keep up the clarity of document accessing in the physical data rooms compared to the modern data room solutions. 

2. Agility

Momentum is very important to the M&A process, and the processing professionals must do everything in their power to allow fast and comfortable decision making. This includes anything from the appropriate access configurations to pre-set channels for the financial transactions. And a data room can be an excellent solution for streamlining all these processes.

3. Collaboration

Many people contribute to the M&A processing, and it is critical to make their collaboration as convenient as possible. A well-built data room offers sufficient security through authorized persons’ access level configuration.

And at the same time, a virtual data room increases usage comfort by letting several users access the necessary documents through their preferred means, such as mobile access.

How virtual data rooms changed M&A

Traditional data rooms made working with documents painful and tiring. Many data room providers learned from personal experience that the file-sharing process must be accessible and straightforward.

That’s how the concept of an M&A data room came into existence. The physical data became digital and migrated into the secure online repository spaces, creating limitless opportunities for M&A deal processors globally.

Below are the top five advantages of virtual data rooms in the M&A sector.

1. Advanced security

Starting with due diligence and all the way to shifts in management, data room software introduces unprecedented levels of confidence when operating with highly confidential documents. 

Virtual data room users establish the parameters of  limited access to certain files, dictate security requirements on the document level, and closely monitor every data access action with tools like:

  • Activity reporting
  • Encryption
  • Multiple-factor authentication
  • Built-in redaction, and more

2. Remote collaboration opportunities

Any virtual data room is an online warehouse of confidential information with numerous tools for individual users to communicate with each other and contribute to the overall success of the deal.

A virtual data room cloud solution simplifies uploading files in bulk, streamlines the analysis process, and allows decision-makers to address the pressing issues faster.

3. Improved accountability

Virtual data rooms introduce a higher level of accountability by enabling users to establish their security access parameters to specific documents and setting advanced permissions for different people. The administrators know exactly who viewed each document from the data room activity reports and can make the necessary changes on the go.

  • Insight: Activity reports can also help make the due diligence process a lot faster. Simply locate the neglected areas and address the matter to the corresponding users.

4. Faster processing 

Virtual data room solutions seemingly sped up the deal closure process. Apart from the documents being reviewed much faster during due diligence and the user activity reports helping address the ignored areas, the potential buyers can also use automated tools for more informed decision making.

As the virtual data room market continues to shift away from physical data, other typically tedious processes such as initial public offering filing or market scouting also became a lot more streamlined.

5. Reduced costs

Last but not least, virtual data room services continue to adapt machine learning and other automatization mechanisms, which helps save money during the M&A process. For example, there is no longer a need to facilitate a physical deal room to access documents which automatically cancels out the cost of rent, travel, and valuable time of the contributing executives.

  • Insight: The virtual data room is overflowing with solutions for different budgets. However, it is important not to make your data room decision based on the cost alone. 
development of m&a deals

Tips to find the best M&A virtual data room for your business

Navigating various virtual data room solutions can become a challenging process if you are not well informed in advance. Consider following the suggestions below to make the best virtual data room decision for managing documents during due diligence and compare online data room providers successfully.

1. Define your data room requirements

Different projects and industries call for different VDR’s functionality. Before you begin looking for virtual data room providers, outline the parameters of your task by calculating how long it will take, who will be involved, and what types of data will be stored and shared.

If it is easier, you can draw parallels with your existing physical data room and brainstorm which of your current file-sharing practices can be improved via virtual data room technology.

To complete the search criteria identification, combine your project’s characteristics with the basic virtual data rooms’ features, such as:

  • Broad files’ format support
  • User-friendly interface
  • Industry-specific security certifications and compliances
  • Access regulation on the user, document, and group levels.

2. Find a virtual data room provider that aligns with your expectations

Using your criteria, shortlist the data room software companies that offer the necessary instruments and an acceptable price. Consider exploring independent reviews of the VDR providers you selected to get the insights from previous virtual data room users.

Additionally, you can contact the representatives of several virtual data rooms to get a walk-through of their deal processing mechanisms, data access security, and documents’ organization.

3. Test the data room during a free trial period

Reputable virtual data room providers will always offer to try their platform for free. Such testing periods are a great opportunity for you to see the virtual data room in action, evaluate its security strength, and experiment with different ways of organizing your documents inside the data rooms.

M&A deals in the US

Today’s M&A deal-making scale is impressive – in 2021, the global merger and acquisition value reached $5.1 trillion. Experts say that data room companies played a  substantial role in such expansion, as they allowed decision-makers to contribute without physical restrictions and review documents faster.

But let’s take a brief look at how the M&A industry in the US reached its current extent.

M&A deals throughout history

M&A deal processing in America tracks back to the 18th century. However, the market really picked up between 1895 and 1905, during the Great Merger Movement. Back then, numerous manufacturers merged to occupy larger portions of the market and gain a competitive advantage.

  • Insight: One of the most prominent historic mergers was the gradual expansion of the Standard Oil Company, which united several major oil companies. In 1911 the Supreme Court ruled to dissolve the enterprise into the New Jersey and New York counterparts, which later became Exxon and Mobil, respectively.

And almost a century later, in 1999, the companies merged yet again, forming the global monopoly known as ExxonMobil.

In the late 20th century, M&A business transactions formed the foundation for this age’s corporate scene. The digital data rooms didn’t begin replacing the typical time-consuming data processing mechanisms until early 2000. And even then, many conservative executives preferred to remain in the physical data room space.

The final transition of M&A deals to online data rooms was triggered by the rise of the global pandemic in 2020. The safety regulations and unstable economy drove even the most old-fashioned executives to remote collaboration.

M&A today

Virtual data room companies reinvented the way professionals approach M&A in general and due diligence in particular. Data room users upload files into centralized spaces without sacrificing security and allowing comfortable access to anyone with sufficient rights.

An advanced virtual data room can go as far as to predict and prevent potential security breaches. As a result, M&A transactions became:

  • More international 
  • Highly transparent 
  • Sustainably agile 
  • More prominent and market-defining

Top M&A deals in the US in 2021-2022

Here are a few examples of the most substantial M&A deals in recent years:

  • Discovery, Inc. and AT&T, Inc. ‘s WarnerMedia created a unified standalone company in May 2021, bringing together over 20 widely recognized brands such as HBO and CNN.
  • In December 2021, the Canadian Pacific railway finalized the $31 billion acquisition of one of its continental competitors, Kansas City Southern, connecting railway networks of the two largest North American countries.
  • In April 2022, the CEO of Tesla Motors, Elon Musk, acquired Twitter, the global social network, in a historic $44 billion deal.
M&A in the USA

Top 5 US M&A industries

According to the largest law firms and investment banks, the M&A deal scene in 2021 focused on five major sectors:

  1. Technology, media, and telecommunications (TMT) with a total deal value of $891 billion
  2. Industrials and chemicals – $243 billion
  3. Pharmaceuticals, medical, and biotech valued at $232 billion
  4. Financial services with a deal value sum of around $167 billion
  5. Energy, mining, and utilities valued at $132 billion

The list is followed by the other industries, including real estate, business services, consumer, leisure, and construction sectors. Below is a brief overview of how virtual data rooms help streamline the key documents processing for the M&A scene top-performers. 

1. Technology, media, and telecommunications (TMT)

Technological developments are tightly connected to sensitive intellectual property documents, talent sourcing, and supply chain complications tackling. Any M&A transaction in this sector calls for particularly voluminous due diligence and the involvement of various experts.

The stakeholders and other critical executives will benefit from VDR instruments like:

  • Automated activity analytics
  • Versatile third-party platform integrations
  • Expansive storage capacities and high processing speed

2. Industrials and chemicals

Slowly but steadily recovering from the COVID-19 uncertainty, the chemical industry deal scene is concentrated on the arising trends such as sustainability, customer-centricity, and digital transformation.

Online data rooms substantially contribute to the latter by creating intuitive solutions for operating with multiple documents, inviting expert opinion, and gathering larger feedback volumes.

3. Pharmaceuticals, medical, and biotech

Healthcare and pharma experienced unprecedented demands as the global health crisis rapidly expanded. The biggest challenges traditionally remained around the sensitive documents, like scientific discovery summaries, patient data, and patents.

The security of data rooms allowed pharmaceuticals, medical, and biotech professionals to collaborate more comfortably with the help of tools such as:

  • Digital watermarking
  • Remote access revocation
  • Detailed activity footprints

4. Financial services

Financial institutions largely participate in M&A deal processing across all sectors, as well as expand on their own. Once again, the most prominent challenge of financial advisors and other experts is to facilitate monitored and ultra-protected access to critical documents.

Additionally, the financial services professionals can take advantage of more streamlined document management, with the instruments that include:

  • Bulk uploading and automated sorting
  • Template labeling and categorization
  • Built-in translation

5. Energy, mining, and utilities

Modern mining and energy companies have to adjust to depleting geographies, employ extensive amounts of professionals, and meet the ever-growing demand. Yet, these obstacles did not prevent dozens of grand deals from closing as the modern industry leaders are well-equipped to face any drawback.

Data rooms help deal makers restrict access to vital site data and other documents while granting access to limitless digital tools.

Final Words

VDR providers continue to surge the growth of M&A by speeding up the due diligence process, storing vast amounts of files, and granting the necessary protection to sensitive documents. As the virtual data room industry’s capabilities enter new dimensions, physical data rooms are confidently becoming an archaic concept. 

To successfully navigate the available virtual data rooms and make the best choice for your deal, ensure to continuously explore the VDR market and compare providers using your own criteria alongside objective feedback.

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