The efficiency of M&A communications is influenced by the development of digital technologies. In this article, we will consider how Virtual technologies provide M&A communication.
M&A deals: what is the strategy?
When forming a company’s growth strategy, it is necessary to determine in which direction it will focus – on internal growth, on external or decide to combine these two approaches. The strategy of inorganic growth is implemented at the expense of partner resources with the subsequent merger into one firm in the event of a merger and acquisition, through the creation of joint ventures, or based on mutually beneficial relations in the event of a strategic alliance. One of the most dynamic directions of corporate growth strategies of companies needs special attention – the strategy of mergers and acquisitions of M&A (Mergers and Acquisitions).
M&A is one of the most important tools of development in a market economy. The goals of this process are to grow the company and create synergies. Mergers can provide economic benefits through economies of scale or the concentration of capital in the hands of more effective management. The key factors contributing to mergers and acquisitions today are:
- global liberalization of economic relations;
- liberalization of transnational capital movements,
- the growing importance of research activities;
- reduction of transportation and communication costs.
The reason for the growth of such deals is increased competition – the fiercer competition in a particular market segment, the more active entrepreneurs are looking for ways to increase investment opportunities of their enterprises, efficient use of all resources, and reduce costs. Thus, a merger can be one of the possible strategies to counter competitors. Because mergers can reduce competition, they are studied and regulated by government agencies.
How to organize secure M&A Communications?
To optimize the merger operation, it is necessary to have a realistic approach to the company being bought. Outwardly, a very attractive object may not be what it seems. The traditional method of finding out the real state of affairs is to diagnose the object of purchase. Both the buyer and the target company must conduct due diligence to determine the value of the target company. To provide productive due diligence it is necessary to organize a secure warehouse for file sharing between contractors. It is a Virtual Data Room, a software that is designed to simplify business transactions and operations with data.
Throughout the M&A process, the initiator of the transaction actively interacts with the external and internal environment of the target company or merger partner. Consequently, the ultimate success of the deal will largely depend on the ability of the initiator of the transaction to build trust in collaboration.
There are the following strategies to organize M&A communications in the Data Room:
- Secure communication and data protection. Every company can alleviate its security risk by making a well-defined, transparent, and disciplined approach to digital cooperation in the workplace. Security of data transmission is carried out using extensions responsible for encrypting.
- Fast transformation. Most transactions seek to reduce costs within the first 18 months. One of the first priorities in planning an M&A transaction must be to arrange IT technologies to support business growth.
- High Productivity. While IT may be focused on the technical aspects of M&A transactions, it’s important not to forget about the influence on end-users. Managing the employee experience is critical to catching deal value, and it’s important to provide clarity and direction throughout the transition. An effective change management plan is developed to attract and retain talent through proactive internal communications and training.