Mergers and acquisitions (M&A) are one of the biggest global industries, with total deal values often hitting the trillion-dollar figure. Data says that the global M&A sector recorded a total deal value of $2.3 trillion in 2024.
Mergers and acquisitions are complex processes that can take months or even over a year for some large deals. An M&A transaction requires hundreds of confidential documents to be shared and viewed by the concerned shareholders.
However, not every transaction is successful. Studies have suggested that as many as 70% of M&A transactions break down and ultimately aren’t completed. There are multiple reasons behind such failures, and lack of effective communication is one of them.
Mergers and acquisitions rely on strategic and transparent communication, and this is where the M&A data room comes into play. Virtual data room M&A not only simplifies the communication process but also addresses many other challenges faced by dealmakers.
Here is a detailed guide to M&A data rooms and why they are a key aspect of the modern-day M&A sector.
Data room M&A definition
An M&A virtual data room is simply a type of M&A software. Essentially, a data room is a secure online document repository used to share massive volumes of M&A data.
Data room M&A is often called a data room due diligence, as the primary function of a virtual data room (VDR) is to streamline the due diligence phase. It acts as a central repository where everyone connected to the transaction shares and accesses confidential data and keeps communication in one place.
Dealmakers or financial firms use M&A virtual data room software for multiple reasons or phases, such as the following:
- Pre-due diligence
- Due diligence
- Regulatory compliance
- Post-merger integration
- Pipeline management
- Transaction reporting or tracking
Why use a virtual data room for M&A?
There are many reasons why dealmakers trust virtual data rooms for mergers and acquisitions. Here, we discuss the top three.
1. Security and confidentiality
Security is arguably one of the key factors that make virtual data rooms indispensable in the M&A sector. Many customers lose trust in companies that fall victim to a cyberattack.
A secure data room helps avoid data breaches, which often lead to financial and legal penalties. For example, the view-only feature in an Ideals data room ensures nobody can download or print a specific document without approval. Such features minimize the risk of unauthorized data use.
2. More efficient workflow
A virtual data room for mergers and acquisitions is not just a simple document repository. It is a complete project management solution that makes the deal flow smoother by:
- Ensuring flawless communication and collaboration between team members and stakeholders
- Simplifying the due diligence process
- Helping deal closing in a transparent environment
For example, Intralinks’ built-in Q&A feature facilitates direct questions and answers in M&A deals.
3. Record tracking
Everything happening in a virtual data room is recorded, and only authorized users can access these records. For example, the audit trails in data room services like Ideals or Ansarada provide a detailed overview of user activities in the VDR. This helps sellers track potential buyers’ interest in the transaction.
Essential M&A data room features
Not all virtual data rooms are equal. Many data rooms used in the healthcare and legal industries wouldn’t cut it for M&As. In fact, not all M&A virtual data room providers offer the type of services and features you need.
Here are some important features of a virtual data room for M&A.
| Category | Data room essential features | Importance of data room features |
| Data room security | Two-factor authorizationData encryptionDigital watermarkingIP address restrictions | Provide data protection from internal and external threats |
| Access control | Roles-based permissionsView-only modeFence-view modeDocument access revokeRemote document deletion | Give administration more control over sensitive data to ensure secure file sharing |
| Document management features | Version controlDocument indexingFull-text searchBulk uploads and downloads | Simplify data access and management process |
| Activity tracking | Audit logsNotification alerts | Give a detailed overview of user activities in the virtual data room |
| Collaboration tools | Instant messagingDedicated email accountQ&A sessionsCommenting featureDiscussion boardsTask management | Ensure safe and two-way transparent communication |
Apart from the above-mentioned data room features, here are other important factors to consider when comparing most virtual data rooms:
- Does it provide an M&A data room checklist? This ensures that you have the proper M&A data room structure for optimal performance.
- Does the vendor support integration with other tools, like Slack and Salesforce?
- How good is their customer support service?
Top M&A virtual data room providers
The following are some of the best virtual data rooms for M&As.
Ideals
Ideals virtual data rooms are globally renowned for their superior security features and diverse solutions. Here are some of the key Ideals’ features for data protection:
- Two-factor authentication (2FA)
- Granular permissions
- View-only mode
- Access controls
- Digital watermarks
These features play a key role in ensuring maximum security in M&As. Additionally, Ideals’ multilingual customer support service sets it apart from other data room vendors.
Advanced document management features and collaboration tools make Ideals a top priority for M&As. Its compliance with the General Data Protection Regulation (GDPR) makes it a key player in the European M&A market. Ideals virtual data rooms are also well-regarded and commonly used by professionals in the healthcare, financial, and legal sectors.
Merrill Datasite
Datasite is a software company that simplifies the dealmaking process by bringing all essential tools into one platform. It helps with everything from preparing and checking documents to post-merger tasks.
Datasite’s key M&A features include the following:
- AI-powered insights
- Redaction
- Q&A workflows
- Customized user access views
Datasite’s easy-to-use technology helps professionals speed up and improve the deal process, making it a valuable tool for modern business transactions. Some of the notable Datasite solutions for M&As include Datasite Diligence, Datasite Pipeline, Datasite Acquire, and Datasite Intelligence.
Box
Box Data Room is a cloud-based platform designed for secure collaboration and file storage across various industries. It simplifies and secures M&A deals by offering features like:
- Document annotations
- Automated indexing
- File merging
- Detailed reporting
- Encryption
- Custom permissions
What’s more, Box allows integration with third-party tools to ensure seamless collaboration and efficient workflow. Box’s scalable solutions and advanced AI tools boost productivity and streamline the M&A due diligence process.
Intralinks
SS&C Intralinks is a virtual data room designed to help dealmakers process transactions quicker and more securely. It offers AI-powered due diligence tools, advanced Q&A features, and strong security measures for M&As and deal management.
Intralinks is mainly used for M&A transactions, bankruptcy, capital raising, business licensing, and life sciences. It enables teams to collaborate on a single platform using features like:
- Real-time insights
- Automated setups
- Pre-configured workflows
Intralinks is ideal for handling complex deals, asset sales, IPOs, and post-merger integration. Such a wide range of features makes Intralinks an efficient tool for companies and executives managing critical business activities globally.
HighQ
HighQ is another practical option for modern-day dealmakers, as it allows teams to facilitate deals quicker with the following:
- Share documents
- Store files
- Collaborate securely
HighQ uses strong security features like two-factor authentication and document watermarking to keep confidential information safe. It also makes the deal process easier with contract management and AI-based document analysis that offer helpful insights.
Customizable dashboards and workflows improve teamwork. It also automates document creation and works well with Microsoft tools. HighQ handles sensitive documents and data, which makes it a top choice for legal teams and businesses that need secure and organized solutions for M&A transactions.
Ansarada
An Ansarada VDR is a highly sought-after solution in the M&A industry. Whether it is due diligence or post-merger integration, Ansarada streamlines safe file storage and secure document sharing.
These VDRs offer all the features necessary for M&As. Notable features include the following:
- Q&A workflows
- Insightful dashboard
- AI analytics
- Document redaction
- Access controls
- Audit trails
Ansarada is well regarded for exceptionally managing requests for proposals (RFPs) to facilitate complex financial transactions. Common use cases of Ansarada include M&As, real estate management, investment banking, and private equity.
DealRoom
DealRoom designs virtual data rooms to help dealmakers manage mergers, acquisitions, and due diligence more easily. It provides a platform with features for both buyers and sellers to make transactions smoother and more transparent.
The software encourages teamwork by allowing different teams to collaborate effectively during every stage of a deal. It also offers detailed reporting and helps manage multiple participants, which keeps everyone informed and aligned.
DealRoom offers multiple solutions for M&As, including the following:
- Post-merger integration software
- Due diligence software
- M&A platform
- M&A deal management
In a nutshell, DealRoom is an essential tool for finance and legal professionals handling complex M&A transactions.
How to structure a data room for M&A
The right M&A data room structure is important to obtain optimal results from the solution. Here are some useful tips for setting up an M&A data room.
1. Plan the layout
Ideally, your M&A data room provider will offer a detailed checklist for due diligence documents. It is important to categorize the files in the right manner and then create subfolders. For example, create master folders for taxation, financial statements, HR data, etc. Subfolders should be created for better organization to make files easier for users to locate.
2. Upload files
Once you have created your M&A data room structure, upload the files according to the checklist. A virtual data room that offers the bulk upload feature is very handy. Some data rooms even allow clients to import data with the same structure as the original source.
3. Assign access levels
Not all files and folders need the same level of security. You can set different privacy levels for each folder or file based on who needs access to documents and for what reasons.
4. Invite users and set permissions
Now, it’s time to invite your team and the buying side to the data room. You can send invitations to several email addresses at once. Make sure you assign the right access permissions for each person. To relieve some of the pressure off of one controller, you can make some of your team members administrators.
You may invite yourself first, using a different email, to test if the permissions you set work correctly. You can change the permissions for your test account to make sure everything is secure.
5. Monitor your data and use the audit trail
The audit log and reporting features help you track buyer interest and ensure users can access only the information you want them to.
Conclusion
Merger and acquisition data room software is a comprehensive data management solution that makes mergers and acquisitions easier.
Virtual data rooms are much more secure than physical data rooms due to their premium features. Data rooms help ensure seamless collaboration between buyers, sellers, and other interested parties. They also assist in protecting sensitive information, help with post-merger integration, and address legal compliance issues.
FAQ
Are virtual data rooms only for M&As?
No, virtual data rooms are diverse data management solutions used by various professionals in different industries.
How secure is a VDR compared to cloud-based platforms like Google Drive?
A secure data room employs multiple security layers to protect sensitive data. Most data room vendors are GDPR, ISO, HIPAA, FINRA, and SOC compliant, which makes them much more secure than tools like Google Drive.
Can I reuse the data room for future deals?
Yes, a data room can be used for future deals, as many VDR providers allow you to archive deal data and save permission settings.