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Chapter 3.9.3 |The Benefits of Using Technology in M&A

Velocity of Information Flow

To a large extent, closing a deal can depend on how fast and efficient information is made available. A typical deal can involve global teams accessing confidential data from multiple locations, as well as significant time pressure for all parties involved. On cross-border deals, one of the biggest business challenges is the flow of deal information to all team members and stakeholders – therefore, increasing the velocity of information flow is critical to M&A success.

Despite the vast amount of information available across a typical deal a significant proportion ends up not actually adding any value to the deal process. This is especially true as the complexity of a deal increases (for example, in the instance of a cross-border deal involving multiple deal teams and data sources across the world). The primary reason for “wasted information” stems from ineffective information-flow management. While deal teams are typically aware that information must flow for a deal to be successful it is not guaranteed that all available information will actually flow and therefore, actually be incorporated into deal decisions. Ultimately, it is the interaction between team members and the tools at their disposal that determines the fate of information and the ease with which it flows.

Critical Steps 

In order for information to add value to a deal there are two critical steps that need to take place. First, information needs to be shared – typically by an individual. Second, the shared information needs to be made easily accessible to all other members of a deal team (information that is not easily accessible can be wasted and essentially disappears from the deal process unless shared again in a different way). Information that is easily shared and viewed within a Smart M&A Platform can be captured by the wider deal team and incorporated into deal decision making or ignored, if deemed not relevant.

Midaxo-Platform-Diagram

How to Increase the Velocity of Information Exchange: Centralize Data

Taking an Analogue approach to M&A makes it both difficult and inefficient to monitor the 1,000s of documents and tasks typically in progress across a deal and to remain in control of critical issues. Information bottlenecks choke project efficiency - this significantly increases the likelihood of “deal-breakers” not being flagged and heightens overall deal-risk.

All M&A teams should consider transitioning away from unspecified or de-centralized methods of storing and sharing deal documents (where these methods still prevails) in favor of a Smart M&A Platform. With a Smart M&A Platform, as deal documents and other related materials are received, they can be uploaded and viewed by team members via the assigning of access rights. Through use of a clear document and folder organization structure, team members can quickly search for and find documents. No more reading through emails received six months ago or project managing from the inbox. To really kick-start the approach to document management, Midaxo’s Smart M&A Platform has Microsoft Office Integration functionality – meaning once documents have been uploaded they can be edited without having to leave the platform. 

The Importance of Organization & Safeguarding of Deal Documents

A less considered and under-appreciated aspect of many M&A deals is the organization and safeguarding of deal documents. Too frequently deal teams waste excessive amounts of time searching for documents, which are attached within archived emails, stored somewhere on a local server, or happen to be saved on a team member’s personal computer. By this measure, document management is one of the most hidden-in-plain-sight inefficiencies and untapped time saving opportunities for a deal team to leverage.

Why Deal Teams Should Stop Using Hard-Drives as The Preferred Storage Solution

Hard drives and shared folders used to track all the questions, answers, and findings that come along with M&A communication exchanges pose their own security threat. When an organization replaces these devices with newer versions, or perhaps upgrades to another system entirely, where exactly will the devices go when disposed of? The vast majority of M&A departments don’t take this into account – the crux is they never really know. 

Security and access is a key requirement for any enterprise system today - especially where there is a need to prevent unauthorized user access and to protect data. Midaxo’s Smart M&A Platform has been built with an acute understanding of the importance of data security and maintaining the confidentiality of information. In fact, this key factor is incorporated into the way the Platform has been designed and built. Technical security starts with comprehensive security architecture that defines a solid and secure foundation for Midaxo’s Smart M&A Platform. The architecture is based on well-proven and widely used secure products, methods, and protocols. It has been designed to protect data and to ensure its confidentiality, integrity, and availability. Strict access control via custom permission rights allows only authorized users to access data and documents. Furthermore, the Midaxo Smart M&A Platform meets the international ISO 27001 Standard. 

Why ISO 27001 Matters

It’s understandably important to look for certifications when determining a software company’s credibility. But ideally, an organization looking for a dedicated M&A solution should partner with a provider that has been ISO 27001 Certified. Not just ISO 27001 compliant or consistent with ISO 27001, but audited and certified. Very few software providers in the M&A space pass this internationally sanctioned audit addressing how well a company executes processes around their technical application. So, keep this in mind when evaluating M&A software.

Things to Consider: Security

For all organizations working in the M&A space, security is currency. That goes for solution providers, as well. One thing we know at Midaxo: it’s absolutely essential that we handle matters of customer data security with the utmost care and technical savvy. Why exactly do we push this to the forefront of the M&A conversation? The answer is simple. Organizations with sophisticated acquisition strategies and pipelines brimming with new opportunities need to be assured their confidential plans, data and documents are not going to fall into the wrong hands.

The world of M&A relies on security to maintain accord. Thus, acquirers should rely on the right software solutions providers to facilitate security on their behalf. What many M&A leaders do not realize is that the Analogue way of managing data security across the M&A process simply doesn’t cut it. Not even close. Unfortunately, despite the fact that security is usually considered to be a top priority, the security measures taken by many organizations aren’t reflective of the risks incurred across a typical M&A process. 

A Jigsaw Puzzle of Disparate Tools 

Many organizations manage their M&A process with multiple applications that are not connected – very much like a jigsaw puzzle of disparate tools, where the pieces simply don’t fit together. The glue that manages to keep this "system" from falling apart is comprised of team members spending many unnecessary hours trying to make this flawed approach to working semi-functional.  And what happens because of this? More often than not, team members, stakeholders and external advisors communicate via email and revert to project managing from the inbox. The primary problem with email communication is the data is readily accessible – and “hack-able”. Furthermore, emails can be easily forwarded – even by accident. And so, with one click of a mouse, important M&A plans, data, documents, etc. can show up in the wrong recipient’s inbox - either meticulously or as a result of user error. 

Things to Consider: Safeguard Information

It is advisable to safeguard or protect confidential deal data and documents using a password protected cloud-based solution. Even if a laptop is accessed by a third-party, information stored in the cloud is protected. Using Midaxo’s Smart M&A Platform, in the event that a laptop is misplaced, damaged or stolen, for instance, a project administrator can instantly remove access or change the user password preventing the leakage of confidential data. In contrast, if materials are saved exclusively on a laptop or tablet device, etc. confidential deal data and documents could easily become compromised.

Sleep Easy Knowing Deal Data is Secure 

It is also important to ensure business continuity by properly backing up deal data and documents. Some methods of storage are ineffective in safeguarding against the risk of data loss. Information stored on a personal computer or laptop, for instance, could be lost forever if the machine is misplaced, damaged or stolen. Similarly, deal documents stored on a local server could vanish if the hardware fails or in the event of a natural disaster. A better solution is one that includes the automatic backing up of data at remote offsite locations on a frequent basis. The servers powering Midaxo’s Smart M&A Platform are automatically backed up on a daily basis so deal teams can be assured all data and documents are safe. 

In addition to automated back-ups, having the ability to view a detailed audit trail of who has been active on a project is of great benefit to M&A teams. Questions that may be asked across an M&A project include who participated in a task? Who said what to a particular stakeholder? Who viewed a particular document and when? A detailed and flawless audit trail capturing any action associated with the deal should be seamlessly incorporated into your chosen M&A software solution. Midaxo’s Smart M&A Platform does just that.