For mergers and acquisitions, due diligence data rooms have quickly proved to be indispensable to lower costs and speed up the process. Here is more about its functionality.
The purpose of operational due diligence
Operational due diligence is an essential part of the M&A process, as it provides the buyer with important information and can serve as a basis for decision-making. In this case, Virtual Data Rooms https://virtual-data-rooms.org/ provide customers with the best possible support in the implementation of due diligence, using a standardized approach.This kind of evaluation means the research of the operating activities of a company. The market capacity and potential for its development, the likelihood of crises, the need to invest in the renewal of production facilities, the impact of innovations, and other factors are assessed.
The duration of the due diligence procedure takes from several weeks to a year, depending on the structure and size of the business. This procedure is very relevant since both parties are interested in the objective and competent conduct of these procedures: both the buyer (investor) and the seller (the party attracts investments).
Experts assess the benefits and liabilities of the proposed transaction by analyzing all aspects of the past, present, and projected future of the business being acquired and identifying any possible risks. Analysis based on inside information, regulations, data provided by competitors and partners.
The grounds for conducting operational due diligence may be:
- sale/purchase of a company;
- assessment of the investment attractiveness of the company;
- public offering of securities on the stock market;
- mergers and acquisitions;
- creation of a joint venture;
- commercial lending;
- checking the reliability of your counterparty.
Virtual Data Room: how to create an operational due diligence report?
When analyzing the structure of the organization, the correctness of registration of the issued securities, as well as the transactions carried out with their participation, is monitored. In particular, the availability and sufficiency of payments to the shareholders are checked. After completing this part of due diligence, an opinion is issued.
The operational due diligence report is one of the most important documents in preparing for a merger/acquisition transaction, in negotiations with banks when obtaining loans, as well as when an enterprise intends to enter the stock market, and in many other cases.
The due diligence procedure includes five stages, at each of which an intermediate result is issued. With this, a large amount of sensitive data is analyzed. Thus, there is a need to provide a secure repository and collaborative tool to optimize the workflow. Virtual Data Room is the best solution for this.
Data Room operational due diligence report has the following benefits:
- It’s cheaper. Materials for printing, service of office equipment, post office, and couriers – all this adds up to a round sum if the bill of documents goes into the hundreds every month. With the transition to electronic document management, large companies are cutting their document management costs by 80% or even more.
- It’s faster. Data Room transactions take less time, which means that customers get what they want faster and prefer you to competitors. At the same time, employees’ time is freed up, who no longer need to print, file, and store thousands of pieces of paper.
- It is easier. All documents will be stored in the cloud – you have access to them around the clock from any computer on which your electronic signature is installed. In addition, electronic documents do not take up space – this is especially true for companies with a small room or virtual office.