M&A data room as a surefire way to boost deal execution

The proper or incomplete management of a transaction can break or build the boldest strategy. Ideals virtual data room (VDR) provides absolute control and security throughout the entire deal execution, which is especially crucial amidst the expected 10% rise in mergers and acquisitions (M&A) activity in 2025.

What is an M&A data room?

An M&A virtual data room is a data room used specifically for managing complex financial transactions such as M&A. Virtual data room providers offer a secure online repository where important confidential documents are stored and shared during mergers and acquisitions. It helps buyers, sellers, and advisors safely review confidential data needed for the deal. 

Note: Mergers and acquisitions are business deals where companies either join forces or one company takes over another. A merger occurs when two companies unite to create a single new company. An acquisition happens when one company gains control of another. These transactions are often aimed at expanding the business, entering new markets, or boosting efficiency.

Using virtual data room services during M&A allows to:

• Keep information safe
  Protects sensitive data with strong security features like encryption, multifactor authentication, redaction, etc.
• Saves time
  Stores all documents in one place, making it easy to organize and find files.
• Access documents easily
  Team members and advisors can access documents anytime, from anywhere.
• Track activity
  Shows who viewed or edited files, adding transparency to the process.
• Reduce costs
  Avoids the need for physical data rooms or unnecessary travel.

Why do M&A dealmakers need virtual data rooms?

Successful financial transactions require superior strategies, comprehensive due diligence, and well-developed integration plans. 

In mergers and acquisitions, both the sell and buy sides require convenient access to sensitive documents to complete the due diligence process and meet target closing dates. The best way to achieve this and ensure proper deal management is virtual data room solutions. Here’s how the best virtual data rooms simplify each stage of the due diligence process.

Exploratory or pre-marketing phase

To facilitate the due diligence process, before the M&A is planned, the seller prepares the virtual data room and uploads sensitive pre-marketing documents that must be available at short notice to all potential investors.

Due diligence phase

Historical information, compliance documentation, financial statements, and other crucial confidential documents are easily distributed to virtual data room users. During this process, potential buyers may ask questions about documents or even request additional ones. Once due diligence is completed, the deal is closed and the content of the virtual data room is archived.

Post-merger integration phase

The virtual data room helps merged companies integrate their financial, legal, IT, and other departments. As the new company continues its growth path, the virtual data room serves as a corporate document repository and assists executive communications. Storing corporate information in the virtual data room instead of a traditional physical data room results in seamless collaboration.

M&A virtual data room advantages

Reduced M&A timeline and expenses

Today, virtual data rooms are the industry standard for secure document sharing. Compared to a physical data room, M&A virtual data rooms save travel time and expenses, make document access easier, and access management less costly. More importantly, virtual data rooms enable several deals to be conducted at the same time within a shorter period, which would be difficult to do with physical data rooms. No matter what kind of deal you’re preparing for — initial public offering, M&A, or investment banking round — data rooms are designed to ensure it’s conducted smoothly and rapidly.

Secure and controlled deal environment

Although sometimes wrongly labeled as “virtual data rooms,” the typical file-sharing products are not ready to support dealmakers. The main point is that only virtual data rooms provide enhanced data security measures and the possibility of having absolute control of the environment.

• Unlike FTP or file sync and share applications, the higher security standards implemented in virtual data rooms for M&A allow transferring files safely between multiple interested parties.
• Virtual data rooms for mergers and acquisitions also allow restricting access to such features as printing, downloading, or even viewing certain documents before the second round of due diligence.

Source: Ideals Help Center

Ease of setup and use

A thorough preparation normally precedes the due diligence process. Nevertheless, in the modern business world, a deal can start when it is least expected. In such an intense environment, it is no surprise that most dealmakers trust to work with the best data rooms for M&A. In most cases, a virtual data room can be opened within a few minutes. Most virtual data rooms offer multilingual access, a mobile user interface, and many other convenient options that traditional data rooms can’t provide.

Source: Ideals Help Center

Legal compliance

The use of M&A data rooms facilitates compliance with international legal requirements such as the Sarbanes-Oxley Act, HIPAA, or GDPR. Since the obligation to provide all the documents required by the law is usually a primary concern, most M&A virtual data room providers have legally compliant due diligence index templates that help the seller with the document preparation phase of an M&A deal. 

Once documents are prepared and uploaded into the VDR, they become accessible to all potential buyers, and the system tracks every action for each document. After a deal is finished, both parties, the sell-side, and buy-side, get the DVD or flash-drive archive of the deal documents accompanied by audit trail reports of their detailed activities. They can be used as evidence in case of legal dispute.

What documents to add to an M&A data room?

These are examples of documents to add to an M&A data room. The selection might differ depending on a specific deal case.

• Corporate documents
  Articles of incorporation and bylaws, shareholder agreements, board meeting minutes, organizational charts
• Financial records
  Audited financial statements (3–5 years), tax returns and filings, profit and loss statements, budget forecasts and financial projections
• Legal documents
  Contracts and agreements (e.g., supplier, customer, partnership), intellectual property (patents, trademarks, copyrights), litigation history or pending legal matters, compliance certificates and licenses
• Operational information
  Employee contracts and benefits plans, inventory and supply chain details, key operating procedures, asset lists (real estate, equipment, etc.)
• Sales and marketing documents
  Customer contracts and sales agreements, marketing strategies and materials, sales performance data
• Industry-specific documents
  Regulatory approvals (for healthcare, energy, etc.), environmental compliance reports

Build an M&A virtual data room

Upload due diligence documents

• Right-click functionality and familiar drag-and-drop handling features help to quickly add, delete, and move folders and files to the due diligence index.
• Easy and quick upload by dragging and dropping multiple files and entire folders into the virtual data room.
• Accelerated upload process with Ideals Sync enables direct synchronization of files on local and network drives to the cloud storage.
• Microsoft Word, Excel, and PowerPoint files are automatically converted to secure PDF format during the upload process. This helps eliminate issues with document preparation.

Organize data room index

Source: Ideals Help Center

When all necessary information is uploaded, deal documents should be well-organized and named, so potential buyers can easily find them.

• Folder structures and files can be easily organized before they are accessible and made “live” to interested buyers.
• Automatic index numbering eliminates the need to manually reorganize or rename files and folders. When files are reorganized, the added or deleted document index is automatically rebuilt.
• Easy file and folder renaming by right-clicking and selecting “rename” is another time-saving feature.
• Add notes to folders and files to provide additional instructions for your interested buyers (bidders) and other interested parties.
• Easily notify all users of changes by right-clicking on any files or folders you made changes to.
• Labels allow you to categorize documents for faster search. Use multiple labels to organize files in a way that meets your project needs.

Manage bidders access

Source: Ideals Help Center

Throughout the deal, users can be continuously added, and virtual data room administrators can easily manage their permissions. Invite participants and assign their access permissions quickly, so bidders can begin and complete their due diligence sooner.

• Make entire bidder teams live on your VDR in minutes: import lists of users from Excel or “.csv” files directly into the data room.
• Easily and quickly add and remove participants and apply document access rights by using simple wizard-like tools.
• Set bidders faster: organize users into groups and batch assign permissions based on folders or file types.
• Prevent potential leaks and assign proper access permissions to the right people. The Ideals virtual data room gives administrators the ability to restrict access to certain online data room members and control who can view, download, and print information.

Make better-informed decisions quickly

Insufficient or delayed due diligence processes are a very realistic and common risk when pursuing a deal. With Ideals virtual data room, dealmakers, and corporate executives can leverage cutting-edge technology to anticipate different scenarios in the accelerated pace of modern M&A deals. The Ideals platform enables them to:

• Accelerate the M&A with quick and easy document access on any device, including mobile.
• Eliminate file distribution issues and document loss. Users have full access to reporting tools and can verify who accessed sensitive data when it happened, and who has been most active in the M&A virtual data room.
• Reduce legal risks. A full audit trail in the virtual data room can assist in case of possible litigation.
• Quickly and efficiently respond to bidder requests. With an advanced Q&A, hundreds of users can monitor question status, automate the communication workflow, and add attachments from the virtual data room to their messages.
• Monitor the deal process in real time. Use dashboards and reporting tools to receive up-to-date progress tracking and workflow transparency.

FAQ