This article is brought to you by Merrill DataSite.
The due diligence process is an essential part of any M&A transaction; it allows a potential buyer to determine whether or not a would-be purchase is a good fit. The execution of due diligence is not a negotiation or an investigation, but rather a review of extensive amounts of data. It is a fact-finding mission.
As such, the seller can put the best foot forward by using a virtual data room, or VDR, to facilitate the process. A VDR lets the seller package and present the asset in the most effective way, so that information is easy to find and the disclosure process is as simple as possible for all parties, including legal teams, advisers and banks. The research provided ensures there are no surprises before a merger decision is made. Everything that could affect integration—from financial records to human resources policy—must be scrutinized.
The time frame for due diligence varies enormously, depending on the size and complexity of a deal. Merrill DataSite has observed that the average number of days for a project is relatively static, with our VDRs staying open for an average of 340 days. Where we have seen a change, however, is in the number of users, which has been progressively increasing. This indicates that the core parties working on a deal may be inviting more people to review information more intensely during due diligence—making transparency and ease of use even more important during this critical time period. //