When mergers go well, they can enable a company to enlarge its market share, achieve economies of scale, reduce its financial risk, and diversify its product and service offerings. Author and motivational speaker, Simon Sinek, famously compared mergers to marriages. Like any marriage, there are ups and downs and sometimes, things go wrong and there are a number of reasons why this might be the…
The data room is dead
To say that corporate work environments have changed over the past two decades would be a colossal understatement.
To say that corporate work environments have changed over the past two decades would be a colossal understatement. We have become so accustomed to the rapid pace of technological advancement in the 21st century that sometimes it’s easy to forget how far we’ve come—and how far we still have the potential to go.
This became particularly obvious upon reading the last article on efficient M&A dealings (which you can access here) and coming across this 2006 article. Here you can read the author enthusiastically praising a new business technology that was burgeoning at the time—virtual data rooms.
On first glance this old article struck me as quaint, since it unknowingly foregrounds the near-ubiquitous shift from physical to virtual data rooms we have seen occur over the past decade. However, I quickly saw clear parallels with what is occurring in the deal market today—virtual data rooms are now being replaced by new end-to-end deal management platforms.
Physical data rooms
Gone are the days where due diligence and information security meant sending staff in-person to pour over hard copy documents in a small repurposed office; quite literally a data room. Whilst necessary prior to the digital age, these rooms came with a load of costly, inconvenient baggage.
As you can probably imagine, setting up and operating a secure data room was neither easy nor cost-effective. Physical copies of all relevant data had to be produced and delicately managed, such that necessary parties could access only those documents relevant to their position in the deal. Significant monitoring and lodgement systems were also required to maintain an acceptable measure of data security.
Furthermore, accessing and utilising these rooms was also difficult logistically. At times upwards of 20 different data rooms would exist for the same deal, requiring staff travel between various locations in order to complete due diligence. Overall, it seems fairly clear why virtual data rooms have caught on since 2006.
Virtual data rooms
When virtual data storage technology began to take off, it didn’t take dealmakers long to work out that the old physical model was not up to scratch. These services created purpose-built online platforms where information could be securely stored and managed digitally, effectively eliminating the need for costly in-person dealings.
This meant that deals could be conducted remotely without issue, while basic digital access parameters meant that data management became a far simpler process. In fact, there was only one major concern raised by the advent of virtual data rooms—security.
After decades of securing data via physical means, aptly risk-averse dealmakers raised concerns that online data storage was not as secure. Fortunately, it didn’t take long for businesses to realise that virtual data room services offered powerful cyber security protection, and virtual data rooms soon became an industry standard.
End-to-end deal management platforms
And that brings us to today. Virtual data rooms have proven to be an integral part of corporate dealing over the past decade, but now we are seeing history repeat itself. Just like their physical predecessors, virtual data rooms have been made essentially redundant by the advent of end-to-end deal management platforms.
These comprehensive new services go beyond basic data room functions, and instead integrate a diverse body of powerful technologies that assist in all aspects of corporate dealmaking. Most notably, these include collaborative workflow and project management tools which allow centralisation of work as well as data, further magnifying productivity via what is essentially a ‘one stop shop’.
Further, modern deal management technologies are more secure than ever. Even the most risk-averse dealmakers can rest easy knowing that their information is protected by advanced cyber security measures and sophisticated data management tools.
Essentially these collaborative platforms perform all the functions of a virtual data room, and more—most notably, they allow firms to keep all project work and data in one highly secure, centralised location. Thanks to these features the virtual data room is no longer enough for modern dealmakers, and has resultantly been replaced by end-to-end deal management platforms.
Thanks for reading! As you can see, just like their physical predecessors virtual data rooms are a thing of the past. Instead, services such as thedocyard offer a fully comprehensive end-to-end deal management platform that boasts all the benefits discussed in this article, and more. Sign up for a free 30-day trial to experience the advantages for yourself. Meanwhile, if you found this article interesting please subscribe below to see more informative content on how technology can be used to forge better deals, more efficiently. I hope you have enjoyed reading, and will see you in our next post—all the best!