To keep things in order and going in the right direction, you’ll need the necessary tools. You must assign and interact with the appropriate individuals while completing due diligence and overseeing various operations.
So, what exactly is M&A deal tracking?
Deal tracking is a method for corporate development teams to keep track of possible targets in an orderly manner as they progress through the M&A lifecycle (from deal sourcing to integration). It lets businesses keep track of the sequence of events associated with each contract, as well as the stakeholders allocated to these agreements.
In the past, deal tracking was a time-consuming process
Back when paper was king, mergers and acquisitions were time-consuming and necessitated a forest’s worth of paper—material that would get lost, decay, and require continual storage and maintenance.
M&As were getting increasingly difficult as organizations’ security and data requirements grew more complex.
Then, approximately a decade ago, a technical revolution occurred: virtual data rooms (VDRs). VDRs have now become an essential tool in mergers and acquisitions, with users claiming that they reduce time, improve transaction tracking, and make the process more secure.
So, how do virtual data rooms help with deal management?
Virtual data rooms are safe and private online environments where participants in a transaction, such as buyers, sellers, attorneys, and accountants, can upload, sign, review, and keep important documents.
VDRs are often put up as part of due diligence when a company is purchased or sold, and many have praised them as a cure for all their previous M&A woes.
So, what exactly is the issue?
Traditional VDRs are inconvenient for a number of reasons.
- One of the most significant disadvantages of traditional VDRs is their high cost, which may reach several thousand dollars per firm.
- While this may not appear to be a large sum to some, when handling files for a portfolio of firms, the costs may rapidly pile up, and you can easily wind up paying tens of thousands of dollars.
Traditional VDRs are prohibitively expensive.
That would be one thing if you were paying a lot of money for something that would magically snap and solve all of your M & A problems. Traditional VDRs, on the other hand, do not function in this manner. On the contrary, they take a long time to set up and, because they are generally done on a defined schedule, they may require changes that are difficult to make on the fly. Traditional VDRs, while still superior to old-fashioned paper-based transactions, are not without flaws.
There isn’t a comprehensive deal management system in place.
Another key issue with many current and previous deal monitoring systems is that they focus primarily on one or a few parts of a merger and acquisition transaction. Furthermore, many VDRs are not designed to endure the whole transaction process.
How to Use Deal Flow Management Software to Improve Deal Tracking
Deal monitoring software helps to optimize the merger and acquisition process in a variety of ways. Here are five ways that good deal flow management software may help you optimize your workflows and transaction monitoring.
Create and maintain team workflows.
A M&A transaction might easily involve 10 or more internal team members, as well as third-party accounts and attorneys. Teams should be able to effortlessly create, assign, and monitor assignments with an effective deal tracking system.