High stakes M&A is definitely not for the faint-hearted. When you consider the sheer valuation of such transactions it’s enough to make your head spin. Take for example AOL and Time Warner in 2000 – 165 billion US dollars. Yes that’s right – BILLION! And that’s nothing compared to Vodafone and Mannesmann in 1999 – 202 billion US dollars. Fingertips are sweaty just from typing such massive numbers.
Point is that mergers and acquisitions are the crème de la crème of investment banking. Executing them with perfection isn’t just an desirable bonus outcome, it’s the only acceptable outcome. It’s also the difference between your firm being the belle of the banking ball and the ugly sister who ends up dancing with her brother because no-one else will.
With that said, how can you carry out such an audacious task with a bit more style and a lot more efficiency? Two words – enterprise collaboration. Let’s breakdown the M&A process into its rough constituents and see how technology can offer a helping hand (don’t worry, we’re not going to be analysing this procedure to the nth degree, it’s way too complex).
Your average merger and acquisition takes around six months assuming no significant delays due to things like contractual consents, second request for a HSR antitrust filing or other regulatory requirements. Within this process will be a multitude of stakeholders including the target, the buyer, you (the investment bank), legal firms, regulators, accountants and tax advisors.
In a nutshell, enterprise collaboration technology will provide you with a single secure online space for you and your stakeholders to work in anytime and anywhere. Added, the platform will offer a whole host of tools that will allow you to carry out daily tasks and communications with speed and accuracy. So, with that précis, let’s get into the nitty gritty.
No drama, just documents
Enterprise collaboration offers a secure files module which allows you to instantly share M&A documents such as letters of intent and engagements, confidential information memorandums (teasers) and, further down the line – merger agreements. This tools reduces dependence on unreliable email where important messages are lost in a convoluted chain of replies, replies to all, forwards, Ccs and BCcs.
The files module also offers auditing and workflow tools which allow you, your colleagues and third parties to easily collaborate on documents and develop them together in an iterative manner (with full audit and approval facilities). Particularly useful when writing a merger, share purchase or asset purchase agreement which requires attention to detail on things like representations, warranties, covenants and termination rights. You and your legal team will be able to create, mark up and amend such clauses with ease, whether you’re in the same room or not (heck, could be different countries and it’d be just as easy).
The files module most importantly is as safe as a safe. Offering multi-level permissioning for users and groups, digital rights management and document encryption. With such stringent safety measures, the risk of leaking sensitive information is significantly reduced.
Due diligence with a difference
Possibly the single most important function in a M&A deal, the thing that determines whether or not the entire deal will happen or not is due diligence. And this where an enterprise collaboration platform comes into its own. There are two incredibly valuable tools that are on offer.
Firstly is the virtual data room. Offered on a SaaS model it’s deployed at the click of a finger. This offers a secured and controlled environment for regulated information to be shared. Its multi-layer security ensures that sensitive data isn’t leaked or copyright infringed. Q&A functionality will provide a seamless workflow between the bid and sell teams. Add to that custom notifications, audit trails and analytics, and you have a powerful weapon over time and cost.
The second tool is the spreadsheet/database module. Streamline due diligence by using structured checklists (that you have pre-configured) that allow stakeholders to assess legal, accounting, financial and business information. You’ll also be able to instantly generate due diligence and MI reports to gain oversight of the deal at any stage. Added to this is the ability to send email alerts to specific people if specific parts of the due diligence raise concern. All information plugged into the database is archived ready for auditing.
Information, confidentiality and time are the holy trinity in mergers and acquisitions. The virtual data room and spreadsheet/database module pay homage to all three.
No security? No deal.
Without nailing down the security angle in a M&A transaction, all other conversations are, quite frankly, moot. When you’re talking about a deal worth literally tens to hundreds of billion dollars (again yes – BILLIONS), confidentiality is paramount.
A good collaboration platform will offer multi-layer security. Firstly the platform must be hosted in a leading data centre in a country of choice (ahem, Patriot Act). The software vendor (not just the data centre) should be ISO 27001 certified. Not to mention the vendor’s products should be independently audited and penetration tested.
Secondly, the platform itself should offer security features. Access to the system should be controlled with user ID and password protection, not to mention IP restricting to prevent logins from designated places.
Thirdly, the data held within the system must be secured with granular permissioning, so only certain people and/or groups have access to certain data. Additionally, the data itself should be protected from copyright issues using digital rights management and PDF encryption. This means being able to watermark documents and disabling save, print and copy.
And then there’s the rest…
No enterprise collaboration discussion is complete without at least a cursory tribute to the social tools. Blogs, wikis, commenting, liking, activity streams, private messaging and personal bios; all these things will create a seamless user experience that’s not only sociable but practical and time saving. The ability to instantly know who’s who, who’s doing what, and what’s being said about this and that: priceless.