Introduction to M&A data rooms

Innovation is at the core of the business world. For companies to develop, to grow into big conglomerates serving people the best solutions possible, they also need to have possibilities for testing out ideas, combining concepts, and brainstorming with other companies.

Through a joint effort with another business, both companies benefit in the long term. And, sometimes, if the collaboration yields the appropriate results, one of the firms might offer incorporation into their business structures. This is one of the ways an M&A deal can be struck.

But what will the future of this sector look like, and how will those deals be accomplished in the upcoming years?

M&A statistics: Main trends

The world of M&A deals has been strongly influenced by the global pandemic, resulting in a drop of interest in companies combining their forces.

However, this is now changing, and here are a couple of M&A trends that are prevalent throughout various industry reports, showing us a better future for the M&A deal-making market, while also stepping away from a physical data room solution.

Current standing of the market

It has been over two years since the pandemic started, and with the business world changing its operations to a new, remote standard, dealmaking also needed to adapt.

A huge dip in the market activity was noticed in April 2020, but we observed peaks in activity again around both February 2021 and July 2021. This has shown us that the market is recovering from the sudden drop in activity, and is well on its way to increasing the revenue of dealmakers even further.

According to the report Deloitte made about M&A dealmaking, people are hopeful for the future. 70% of the respondents from the corporate world believe that the number of deals will be larger than before, and 68% of PEI specialists also back that statement. Those parties (corporate 75%, PEI 66%) agree that the size of those deals will be bigger than before, contributing to the growth of the sector.

We are on the cusp of a new era in dealmaking, a time where corporations will unite to create brand new solutions that optimize lives, help with the management of ongoing projects, and fix the mistakes made in the past. The upcoming years will herald a shift in the common operations in the M&A space.

Visible shifts

Apart from the current state, and the prognosis of what kinds of deals will be concluded in the future, we also have some trends directly related to sales of a company.

Strategic sales do not seem to be as important as they once were in the PEI sector, as they decreased from a 52% strategic sale forecast in fall 2019 to a 37% strategic sale forecast in fall 2021. This is a huge difference that indicates the ever-changing character of the market.

As one statistic significantly decreased from the pre-pandemic days, others have increased. A sale to another PEI seems to people 10% more likely as in fall 2019 as 23% respondents were convinced that this will be the main form of portfolio exits, while in fall 2021, it was a staggering 33% concerned with a business sale to another PEI.

The outlook on IPOs changed the least as it only went from 24% to 30% over the course of the last two years. We can notice that even though the changes were pretty visible, strategic sales are still seen as the preferred method of a portfolio exit.

Those events are usually associated with a lot of cash management, and this has also been a subject of focus for a lot of companies in the post-pandemic reality.

According to Deloitte’s report, 71% of businesses engaged in cash management practices, pro-actively working on optimizing the company’s cash flow, and even reducing the staff of the business to keep it afloat. 26% of respondents are just now starting their practices.

The visions for the future

In line with the remote character of work, many companies want to restructure their business operational capabilities. There are many events that cannot be forecasted in the lifecycle of the company, but the business can be future-proofed by some of the following methods:

  • 15% of the respondents from both PEI and Corporate are of the opinion that a margin expansion is a key reason for their changes. This profit increase could lead to a more optimized cash flow and a possibility for growth.
  • 17% of people believe that this is central to the reconstruction of the business, as usually more organization leads to better decisions.
  • Sometimes, the company needs to be acquired by somebody, and support another area of business. The preparation of a company for that is a viable strategy for 18% of the decision-makers.
  • It is known that a process of simplification can lead to great overall results in a company’s lifecycle. Restructuring accompanied by automation is the best choice for 21% of respondents of the survey.
  • The last, and also the biggest segment of the survey has to deal with digital transformation. Physical documentation has been a problem due to the sensitivity of data held on paper, and for 28% of Corporate and PEI representatives, this is the key reason for restructuring. And this is also where a virtual data room is a crucial help.

Reasons to use a virtual data room for M&A

The uprise in the need for a digital environment dedicated to document storage has led to the development of virtual data rooms. Most virtual data rooms are built with security in mind without compromising the accessibility of the files inside of that space. Online data rooms also have a variety of tools that help companies with data security, management, and collaboration on bigger projects.

Data rooms for M&A are a subcategory of an online data room, which help in the deal making process. They are specially prepared solutions that help both parties collaborate on the confidential documents while deciding the next steps in the evolution of the deal. From the first meetings concerning the future of the company to the last document signing, a virtual data room M&A will take care of all those needs.

Here are some of the reasons a virtual data room is helpful during an M&A deal:

1. Security

Files stored in the online file repository can only be accessed by those who have appropriate permission settings. Virtual data rooms, unlike the old physical data room solution, offer state-of-the-art encryption logarithms, with the ability to give and restrict access assigned to the administrator of the space. A VDR is the most secure place to hold all of the sensitive documents connected to the deal.

2. Collaboration

Not only is the space secure, but it also enables collaboration between the people involved in the deal making process. Through chat functionality, and being able to make comments on confidential documents inside of the virtual data room, the whole process is streamlined, and saves both time and money.

3. File management

File management is a huge part of any business endeavor. Through templates, AI assistance, and tag systems, the online repository supplies personnel assigned to different tasks with the necessary tools. And thanks to the search engine functionality within the online data room space, no files will ever get lost.

4. Control

As people come and go from the online file repository, the virtual data room providers equip you with a tool that tracks activity in the digital space. This allows for greater control over the main actions that are being taken inside of that space, and how much time someone has spent working on a particular file. Reports can also include heatmaps, folders people have visited, and many other functionalities connected to particular online data room vendors.

Why should virtual data rooms for M&A be special?

There are a couple of reasons why a VDR should be prepared for an M&A deal. While looking for a solution that addresses this particular need, you should be aware of the features that make it truly special. One of the strongest arguments for picking a virtual data room is the due diligence process.

What is the due diligence process, and why should it be concluded in an M&A data room?

Business deals cannot be concluded without trust on both sides of the deal. M&A deals support this trust by introducing a due diligence process, where both parties get a chance to go through the documentation of all the financial transactions, patents, and possible debts a company might have. 

It is a crucial process that involves a lot of documents being shared, and both the sell-side and the buy-side need to know their financial position. Showing those documents might also become a bargaining chip, as the more positive data points the company is able to illustrate, the more leverage they gain in the deal.

As mentioned above, the exchange of details during a due diligence process entails additional security, but without compromising the accessibility of those files. Base solutions of virtual data rooms are able to take care of that, but an M&A data room is an even more custom fit solution for that use case. Let’s explore it further.

Is the M&A data room still being developed?

The development of the online data room doesn’t stop after you purchase the subscription. The developers already included file solutions that accelerate the deal making process, but there are still tools that are being developed and will be implemented as soon as they are ready for rollout.

What is an example of special tools that could be found in M&A data rooms?

AI is one of the most important breakthroughs in the technology of recent years, and it also made its way into virtual data room solutions. Taught by hundreds of deals, and learning as it accompanies you in your deal making process, it is a companion that optimizes the entire process and automatizes processes for you to keep your attention on more pressing issues, like compliance. 

Do M&A virtual data rooms comply with the latest regulations?

Most data rooms created for the occasion of an M&A transaction are both GDPR compliant and focus on bank-grade security of the space. Files stored in the virtual data room are protected by the latest encryption algorithms that scramble the data for anyone who doesn’t have permission to access the space. This increased security also allows for any necessary compliance laws to be followed including ISO 27001.

Does the M&A data room keep track of the activities inside the space?

Yes, it does. Virtual data rooms offer a variety of tracking possibilities. You can auto-generate reports that help you establish who accessed what kind of files in the space, and how much time they spent browsing through the space. You get to know exact statistics about your employees who got access to the space, as well as the other party involved in the deal roaming through your documents. 

But to proficiently roam around the virtual data room, you would need to employ a structure that encourages exploration. How can you do that inside of an online data room?

How to structure data room for M&A

A well thought out structure of files inside of a virtual data room leads to saving in both time and effort. Those are steps that you should follow if you want to make your M&A deal-making process smooth, and problem-free. 

1. Conceptualize the structure 

Each business endeavor needs a plan to increase its rate of success. The same applies to M&A deals, and a virtual data room can help in making that deal making process optimized. Before you start uploading your files into the secure space, you need to think about all of the moving pieces that should be included in your plan.

You will need to think about the types of documents you still have, and if they need to be turned into a digital form factor, or are already digitized. And if you are only dealing with data already on hard drives, what types of documents are you dealing with — are they spreadsheets, PDFs or Microsoft Office documents that will all need to be put in a logical sequence in the virtual data room.

Take a piece of paper and conceptualize where each of those files should go, and what should be the priority of uploading them. Rank them from the most important to the least important, and come up with a structure that supports that. Thanks to this seemingly simple activity, you will save time in the long term, and when you deploy your M&A data room, you will know exactly what to do inside of the virtual space.

2. Give permission

After all of the most important files have been uploaded to the secure online file repository, you can start thinking about putting people in permission groups, and what kinds of access should individuals have in the virtual data room space. 

Start with the internal team, and consider the departments that are involved, and what would their impact be on the overall deal-making. What kinds of documents do they need to prepare, and how do you streamline that process are some of the questions you need to answer before giving appropriate access. 

After you have given permission to your time, it is time to assign the appropriate permission to people outside of the organization. The other part of the deal needs to have access to the space in order to give comments, ask for directions, and simplify the overall documentation so it is understandable for both parties involved in the deal. Virtual data rooms offer tools that aid this process.

3. Come up with a system

Uploading all the documents into the virtual data room and adding every important person to that space is a good beginning for any M&A deal. However, the files will change, moving pieces will appear, and people will need to work on a variety of dealmaking fronts. To organize the upcoming work, you will need to come up with a system. 

You can divide which files are confidential and which aren’t classified as sensitive documents. This would be the easiest distinction for the upcoming files, as well as thinking of filing the documents with each department in mind. This would increase the brevity of the overall structure, making it easier much easier to navigate the space in the later parts of the deal, when there are going to be hundreds of new files on top of the already uploaded ones.

4. Ensure constant updates

A virtual data room also allows you to post constant updates and shows the other party all of the ongoing activities in the virtual space. You are updating and changing files all the time so they are compliant with the newest regulations introduced by the buy-side. 

This can also lead to a better understanding of what still needs to be done in space, and what is already finished, and can be approved by both sides of the deal. 

5. Lead the way 

The last, and probably most important rule in structuring your virtual data room has to deal with the motivation behind using the space. You need to lead the way for other workers to participate in the dealings within the online file repository, so they know exactly why they are doing the activities that have been assigned to them. 

Through careful planning, encouragement, and collaboration with the other party in the M&A data room space, you should be able to create a system that optimizes your deal making process, and the virtual data room providers will support you in it. 


Confidential data handling is important for businesses in general, but it plays a crucial role when it comes to M&A deals. M&A data rooms already support many cross-border, global M&A deals, and according to the statistics above, the number of those deals will only increase. A physical data room could never support that type of dealmaking 

To fulfill the needs of many businesses that will be on the sell-side of the deal, a data room designed for M&A deals will be helpful in accelerating the whole process and aid the due diligence associated with the deal. 
We encourage you to check out the available solutions on the market and see if there is one that fits all your needs. There is a good chance that the virtual data room provider will offer a free trial, and that is the best way of making sure that this is the right M&A data room for you.