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Currently, many companies cannot compete with large entrepreneurs. Everything arises for many reasons, and then there are several options for continuing activities. One of them is when companies go through the merger procedure. In this article, we will discuss the advantage and disadvantage of the merger process.

M&A deals in a business economy

Nowadays, small entrepreneurs cannot compete with large, well-known companies. This requires resources, and all resources belong to the industrial giants. Of course, some are lucky with an idea or start-up capital, and they break out into a large market, but what about ordinary entrepreneurs? An excellent way out of this situation is M&A deals on mergers and acquisitions of companies. This is a simple and effective way to increase resources, capital, and the number of consumers.

A merger is a combination of many companies that results in the formation of a new legal entity. Such an action can be characterized as follows: “All firms must suffer damage to gain an advantage as a single group”.

Accession is also a union of companies. But unlike a merger, a new economic unit is not formed. The main company, receiving all the rights and obligations of the affiliated companies, continues its activities, and the rest cease to exist. So, the target firms must suffer damage for the invading corporation to gain the full benefits.

The process of merging is quite complex, time-consuming, and lengthy. That is why you need to prepare for it in advance and remember all the pitfalls that may come your way. In any case, first of all, you need to take care of the documentation of your company. It should be carefully put in order, supplemented with the necessary papers and an act of transfer drawn up. At the same time, it is better to involve an experienced lawyer who has already experienced such a procedure.

What are the advantages and disadvantages of acquisitions?

The M&A of companies is an ambiguous process. What happens after it is simply impossible to predict. M&A transactions generally have typical advantages and disadvantages. And also they are characterized by a high level of risks with a very low probability of achieving a successful result, which determines this type of transaction as complex.

The advantages of acquisitions are obvious:

• the most obvious result is an increase in capital;
• access to a larger market, for example, to an international one;
• the emergence of an established system for the sale of goods;
• reduction in the cost of goods.

There are a lot of M&A benefits, but they are quite difficult to achieve and they do not occur all at once. More often than not, favorable outcomes improve the new company’s ability to compete. Moreover, because of the appearance of a large corporation, they will pay attention to you, which means that you will have a chance to enchase the number of regular customers.

Business transformation in most cases is followed by several difficulties. Even if there are no fundamental disagreements between the companies, opposition from the personnel of the firms that took part in the merger, misunderstanding of the situation by some counterparties, or deliberate sabotage of the procedure by line managers on the ground is possible.

Disadvantages of the acquisitions include:

• high costs of acquiring a company;
• risks when choosing a target company;
• possible problems with suppliers;
• the need to renegotiate most business contracts;
• difficulties in bringing office work to a single standard;
• possible incompatibility of company cultures on religious, national, or any other grounds.

Following iDeals virtual data room reviews, the software has become the preferred virtual data room (VDR) provider for leading financial institutions, hedge funds, investment banks, real estate firms, and global legal organizations. This article is a review of the iDeals data room.

iDeals data room: how to work with sensitive data?

The organization of work with documents during business transactions requires clarity, order, and execution of the decisions made. Even a streamlined process, including all stages of working with files from the moment they are received, registered, and issued a resolution, to the moment of execution, control and reporting, can fail. The reason for this is the human factor with all the ensuing consequences. Therefore, the data management of the enterprise seeks to automate the processes of document management, reducing the participation of employees. The iDeals data room helps to improve deals management efficiency.

iDeals data room provides the organization of joint work with documents and allows companies to automate the processes associated with the preparation, approval of documents, and control over the implementation of contractual discipline. In the course of negotiating the terms of the contract, the coordinating persons have the opportunity to document their comments and suggestions on it. Based on the results of familiarization with the draft agreement, the coordinating persons establish one of the following resolutions: agreed, agreed with amendments, rejected. All comments and proposals made under the contract are stored in the program database and can be generated in the form of a report by the approving person.

iDeals functions

Basic data room functions that are beneficial for efficient deal management include:

• Structuring documents by folders. A document in the system is not a single file, but an object called “Document Card”. It contains all information about the document – a set of files related to the document of instructions, etc.;
• Versioning of documents and cards is a feature that allows you to look into the history of document changes. For each version, the author, date, and time are indicated;
• Automated business processes. iDeals provides for standard workflows – approval, execution, and familiarization with the document. Document workflows are configured during the implementation of the software in the organization, depending on its specifics;
• Document templates – for approved forms of documents in an organization, it is convenient to create document templates in the system so that employees have access to them, and they do not have to look for previously created documents of this type, and then edit them, creating a new document based on them;
• Electronic digital signature of a document – implemented to protect documents from falsification. The signature confirms the authorship of the document and protects its content from distortion;
• Notification system – the user can receive notifications by mail about new orders, changes in the status of the order, deadlines, etc. Through the link in the notification, you can go to the task to complete it.

iDeals VDR pricing policy

As in any other industry, there are price differences in the field of data rooms, since newcomers cannot use a comparable price module for a well-known VDR provider.

iDeals provider offers plans for large-scaleб mediumб and small projects, as well as for business-class business operations. The price for services depends on:

• the number of participants,
• storage volume;
• the number of projects.

Besides, iDeals data room ensures a free trial version, that allows you to test the product and make a better decision about the suitability of the data room for a specific project.

Investments in startups and growth companies must also be subjected to a thorough examination. To make this procedure simpler and secure investors and companies use virtual data rooms. In this article, we will analyze the functionality of the data room for startups.

Data room for the investor: efficient data management is required

When investing in startups, it is important to assess the investment offer correctly. All available data and information from the company are subjected to critical and questioning analysis and risk assessment. Conclusions are drawn from the answers, which are interpreted depending on the business model but also on the type of investor. For some investors or buyers, the offer is attractive or an exclusion criterion for certain reasons, for some it is not. Essential for this is the due diligence (DD), a professional (risk) analysis of a company. This form of risk assessment is part of daily business in venture capital.

Nevertheless, it must be assured that the risk assessment of such an investment offer is not to be equated with due diligence such as that carried out in large companies. In contrast to large companies, start-ups are still in a young development phase and often only have little data from months to a few years to show. When analyzing an investment in startups, many private investors do not have the same opportunities for analysis as professional investors, such as lawyers, auditors, or technical experts. Private investors can consider these points before investing in startups: team, product, business plan, unique selling point, market potential, financial planning, participation rate, network effects, use of funds, and taxation.

Preparing for and going through venture capital fundraising for the first time can be tough. During this operation, the company will need to disclose a fair amount of confidential information about the business, including all key financial, legal, and commercial documents so they should be organized and prepared ahead of time. Today it is better to do it in a secure cloud-based virtual data room.

How does it work?

The investor sends the startup a due diligence request list in which he requests all information and documents that he would like to look at. The startup then makes this information available to the investor in a virtual data room. The investor regularly commissions external service providers to check the documents. During their examination, they address any further questions to the startup as part of a so-called Q&A process. The results of the due diligence check, including any problems (so-called findings), are summarized by the investor’s service providers in a due diligence report.

What are the functions of the fundraising data room?

Digital data room has the following main functionalities:

• Full-featured routing and tools for describing scenarios for the movement of documents. It is a tool for creating models, standardizing, and optimizing all regular processing of standard documents. Once created, the scheme becomes the basis for automating and managing the execution of a chain of interrelated work by various performers.
• Data security. Data room provides access to documents strictly by the assigned user rights. Texts of documents can be additionally encrypted using passwords or digital certificates. All actions performed by the user on the document (reading, modifying, signing) are logged.
• Register of contracts, terms of deals, the status of mutual settlements under contracts, control of performance discipline upon approvals, etc. – a lot of reporting forms are already included in the data room module, and there is also a report designer with which you can configure any additional report in user mode.