Using Cloud Technology in M&A Due Diligence

The rapid pace of M&A increases the pressure on due diligence teams to verify information provided by the seller, arrive at a plausible assessment of value, evaluate the business opportunities presented by integration and identify risks. It is becoming clear that due diligence teams need better tools. This is where a virtual data room (VDR) can make a significant difference. A well-designed VDR will tighten security and allow parties to exert control over sensitive information. A VDR platform must have tools that allow administrators to designate tiers of access by individual user or user type. These distinctions should be easily configurable and automatically implemented, as should controls over who may download or print documents.

Designated system administrators from the buyer and seller teams should also have the capacity to monitor all activity within the VDR. A good VDR can also allow users on both the buyer and the seller sides to set up secure virtual “meeting rooms” within a separate software layer where authorized team members can engage in frank and private discussion of key documents or issues, and create detailed annotation threads.

As the M&A due diligence process adapts to more and bigger deals in a global environment, buyers need to provide their due diligence teams with better tools to assess the logic that is driving transactions and uncover areas of risk. A well-designed virtual data room can produce a more complete understanding of the proposed deal and its long-range implications.