You're A CFO. How Do You Ensure Your M&A Deal Closes Successfully?

What do you do if you are a chief financial officer of a company attracting investor as well as takeover interest and feel you should explore a potential sale? If you are indeed serious about selling the company but have no experience in mergers and acquisitions (M&A), the first step will probably be the hiring of experienced advisors who have done many such deals. M&A advisors will probably ask you, the CFO, what data room do you want to use.

A data room stores your company’s most sensitive financial, corporate and personnel information. Potential acquirers of your company want access to this information so they can conduct due diligence. Some companies may be tempted to throw all their sensitive information into a Dropbox file or put it on a USB. But this leaves you open to your data being compromised, getting into the hands of a competitor. Besides security issues, conducting due diligence is much more easily facilitated in a specialized M&A data room with various tools such as search, filters and notifications or alerts. Having a data dump will certainly slow down bidder due diligence.

Bidders need to be able to work their way through documentation with ease. Sellers need to be able to keep their documents secure but not at the cost of annoying bidders. A specialist M&A data room will have the capability of allowing bidders to download documents yet is also able to allow a seller to retract documents should the deal turn sour. These documents should also be traceable from a deal intelligence perspective.

Here are some more tips for CFOs who may be looking to do a deal or close a deal successfully with minimum risk and fuss.

Tip 1: Choose a virutal data room that can be accessed from any device

Data rooms should be able to be accessed from a web browser including those run on mobile phones and tablets to help dealmakers on the go.

Tip 2: Choose the fastest technology

Data rooms using technology such as Akamai can help run the Internet faster, at least 50 percent faster than the regular Internet.

Tip 3: Use M&A Q&A

A Q&A process enables sellers to address key issues first by having bidders prioritize questions. This will help the deal move closer to completion as the seller knows it is always addressing the most important questions from bidders. Q&A can also identify where questions have not been addressed, removing any bottlenecks to the deal. Some advisors still run Q&A outside the data room. This makes it nearly impossible to track down all the conversations and emails the advisors may have had. If such conversations happen in a data room Q&A, there may be far fewer disputes post transaction.

Tip 4: Customer support

Working late, weekends or public holidays is the wont of many a M&A banker. Twenty-four hour, seven days a week support for M&A due diligence, where dealmakers are able to speak to a real person within a ring or two, is often invaluable.

Tip 5: Security

If certain users are allowed to take documents outside the room, the documents and their subsequent usage can be tracked if a specialist M&A data room is used. Downloaded documents, with such a M&A data room specialist, can be remotely tracked and destroyed.

Tip 6: Archive

A complete data room archive of the transaction should be become available once a deal closes. CFOs and advisors tend not to care when the deal starts as to whether they need a compliance archive. It may not be deemed important at the time. But a deal archive, a record of everything that went on in the data room during the deal, is crucial, especially if there is any future litigation.