About 35,000 M&A transactions are carried out annually in the world, the total budgets of which reach $4 trillion. But according to Harvard Business Review, about 80% of transactions fail. Why do such projects become unprofitable? How to make the deals more efficient? Here is about it.
The efficiency factors of M&A deals
Over the past 30 years, important changes have taken place in the world industrial markets, among which the globalization of supply and demand, the growth of competition, and the introduction of new information technologies in the management of companies are dominant. Adapting to the growth of competition in global markets, companies began to attach importance to the formation and maintenance of specific forms of joint organization of economic activity.
Mergers and acquisitions (M&A), the most commonly used method of company growth, is the key tool for intercompany integration today. More often such transactions are considered by companies as an effective and quick way to expand their presence in new markets and strengthen their influence. However, empirical studies show that most projects do not achieve their goals, 61% of all such transactions do not pay off the investment invested in them. So, how to improve this statistic? What can be done to make such business transactions more efficient?
Virtual data room: more than data management
It almost always makes sense to start with the foundation of digital infrastructure – virtual data room. This is a platform that is designed to manage relationships between a company represented by employees and customers. The system simplifies a huge number of processes in every department of the company, is implemented within a few weeks, and requires only minimal training.
You can automate M&A transactions, and as a result, make them more profitable using a virtual data room system. Data room creates a unified data repository, stores all data on transactions and projects of the company, allows you to distribute tasks and monitor their implementation, manage employees and generate documentation.
Each step of the M&A lifecycle is usually accompanied by different conditions, and previously all of them had to be kept in mind. Now the business process advances itself, automatically selecting the stages that need to be activated, depending on the conditions of the request received, and, going back, in cases where work needs to be changed.
The benefits of data room implementation are much greater. Here we list the basic and most significant arguments in favor of a data room system:
- Real-time analytics
The data room system allows you to see digitized indicators for any activity and analyze the current situation that is happening in the company at the moment. It becomes more convenient and easier to make important management decisions, engage in strategic planning, and test business hypotheses. After all, all the numbers are stored in one place, and not in Word documents, Excel spreadsheets, and stickers.
- Efficient deal management
The system sets tasks for the manager at each stage of sales. Data room management will speed up the transfer of all your data and tasks. The advantage is that open access to information and data will greatly simplify the reporting and decision-making process. The document flow is greatly simplified – documents of any type are automatically generated when working with partners (business proposals, various waybills, and invoices, reconciliation acts);
- Transparent collaboration
Data room enables a well-structured secure collaborative environment for simplified interaction with contractors. Now business deal automation provides an opportunity to focus on each specific stage, simplifying the entire procedure.