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Effective deal tracking is no easy task.
It requires the proper tools to keep everything in order and flowing in the right direction. You have to delegate and communicate with the right people, all while conducting due diligence and managing different operations.
In the past, companies undertook this monumental task using email, Excel trackers and virtual data rooms. The results were far from ideal.
Deal tracking is a way for corporate development teams to monitor, in an organized fashion, potential targets as they travel through the M&A lifecycle (from deal sourcing to integration). More specifically, it allows companies to keep track of the flow of events related to each deal and the stakeholders assigned to these deals.
Going back to a time when digital was not yet king, mergers and acquisitions were tedious and required a forest’s worth of paper—paper that would get lost, degrade, and require constant space and care. ‍
M&As were becoming increasingly burdensome as businesses found their security and data needs expanding further and further.
Then, about a decade ago, came a revolutionary technological innovation: virtual data rooms (VDRs). Since then, VDRs have become an indispensable tool in mergers and acquisitions with users saying they save time, as well as optimize the deal tracking process and make it more secure.
Virtual data rooms are secure and confidential online spaces where those involved in a transaction—including buyers, sellers, attorneys and accountants—can upload, sign, review and store essential documents.
Companies usually set up VDRs when they are being bought or sold as part of their due diligence, and many have hailed them as a panacea to all their past M&A troubles.
One of the biggest issues with traditional VDRs is that they are expensive, up to several thousand dollars per company.
And, while that might not sound like a lot to everyone, when you are managing files for a portfolio of companies things can add up quickly and you can easily end up spending tens of thousands of dollars.
If you were paying loads of money for something that would just snap, fix all of your M&A woes, that would be one thing. But, unfortunately, that is not how traditional VDRs work. On the contrary, they require a lot of time to set up and, because they are usually set up on fixed deadlines, they sometimes need modifications that can be difficult to make on-the-fly. While still significantly better than old fashioned paper-based deals, Traditional VDRs are not without their problems.
Another major problem with many current and past deal tracking systems is that they focus solely on just one or only a few aspects of an m&a transactions also, many times, VDRs are not built to last through the entire transaction process.
There are a number of things that deal tracking software does to improve the merger and acquisition process. Here are five ways that efficient deal flow management software improves workflows, and overall deal tracking.
There can easily be ten or more internal team members involved in M&A transaction, plus third-party accounts and lawyers. An effective deal tracking system should enable teams to easily create, assign, and track tasks.
Using deal management software lets users add attachments, such as documents and files, directly into tasks for simple tracking. Teams are able to filter through tasks based on progress, assignee, due date, and more, allowing them to quickly find the task they need.
Some m&a transactions tracking software, such as DealRoom, ties project management capabilities with virtual data room features. This allows everything to stay on one centralized platform, instead of spread across Excel trackers, email threads, and traditional virtual data rooms. Not to mention protecting your excel files via password isn't recommended as a security measure.
Another benefit of proper m&a project management is the ability to communicate within the platform. Users can have comment threads directly associated with each task and team members can get notified when a task is updated.
One of the benefits of having a centralized digital space housing all transaction documents and players is that it enables you to collect data on who is doing what and when.
Deal flow tracking software gives teams data and analytics regarding all tasks and user activity throughout the entire transaction’s lifecycle. Teams have access to data such as which buyers are the most active, top viewed documents, task progress, areas of concern, and more.
This data can be coordinated into actionable insights that are used to make informed future decisions.
Tracking deals using tools like Excel, which are not integrated across parties, leads to the creation of work silos. Such silos can be catastrophic during an M&A because they can lead to poor communication and information not getting delivered to the right people.
A good deal tracking system must, therefore, be coordinated across teams and serve as a single unified space for all actions and interactions between all those involved in the project. Not only can internal teams communicate about the project, but external can contribute too.
For example, a due diligence request may require contribution from the buyer and seller. Deal flow tracking software allows both teams to communicate about the due diligence request in one centralized spot.
Some deal tracking software also integrates with additional modern tools such as Slack, a team collaboration tool, to further assist with communication and prevent work silos.
Deal flow management is important even before due diligence begins. The right management tool keeps everyone informed and provides a constant bird’s-eye view of the deal’s progress.
It helps teams organize what needs to happen next and ensures that everyone is keeping up with their tasks.
A good deal management system needs to make all of these things easy for you. This means that a proper deal flow system will provide its users with end-to-end support, helping throughout every phase of an M&A.
Some deal flow management systems even allow users to create labels such as “integration”, so teams can organize each phase and work on tasks in order of priority.
As aspect of deal tracking is knowing which phase a deal is in, and knowing what needs to be completed for each phase. Deal tracking software allows teams to manage each phase with the correlating team members and correct information.
Here are the primary phases involved in your typical M&A, all of which should be covered by your deal tracking system, whatever it may be.
The Preparation Phase
During the preparation phase, sellers work to make sure potential buyers understand and can see why their business presents a good opportunity. You need to have a deal flow system that gives buyers easy access to data and information that will allow them to quickly understand why and how your business works. This phase can last anywhere from a month to a year.
Marketing Phase
During the marketing phase, sellers contact interested buyers and ask for a further commitment by asking them to sign an NDA and, possibly, other initial documents. Ideally, these documents will be stored using a management system. This phase can last 1-2 months.
Due Diligence
During this phase, interested buyers are granted access to the data roomed so they can begin to review all of the necessary information associated with the merger or acquisition. This phase can last 1-3 months.
Binding Agreement
This is when the buyer and seller get into the nitty-gritty of the deal and come to agreements on all of the details. Properly organized and managed data rooms are particularly valuable during this phase of the transaction. This phase can last 1-2 months.
Signing And Closing
In the past, the signing and closing phase could get dragged out for weeks. But the right M&A management system makes getting the right signatures and finishing up your project a snap.
Post Merger Phase
This phase is critical to the ongoing success of the recently merged company. It is important that the system you were using during the merger can also be used to help organize and optimize the new company after the transaction so everyone can hit the ground running.
In order for the M&A process to stay organized and intentional, each milestone of the pipeline should have set entry criteria so it is clear when it is time to move to the next step.
Perhaps most importantly, an M&A pipeline should be a collaborative and efficient process, not merely steps to work through, in order to close deals that live up to their potential value on paper. Additional best practices for monitoring multiple deals at the same time include:
Luckily, these best practices can be easily put into practice by utilizing deal tracking software.
It is also important to note that many teams are working on more than one deal at a time. Deal tracking software enables teams to track more than one deal at a time on one platform, instead of using different data room providers for each one. (Virtual Data Room (VDR) Providers comparison)
Proper deal flow management software is vital to a transaction’s success. It keeps workflows organized and efficient, while still allowing teams to be thorough and collaborative.
Effective deal tracking is no easy task.
It requires the proper tools to keep everything in order and flowing in the right direction. You have to delegate and communicate with the right people, all while conducting due diligence and managing different operations.
In the past, companies undertook this monumental task using email, Excel trackers and virtual data rooms. The results were far from ideal.
Deal tracking is a way for corporate development teams to monitor, in an organized fashion, potential targets as they travel through the M&A lifecycle (from deal sourcing to integration). More specifically, it allows companies to keep track of the flow of events related to each deal and the stakeholders assigned to these deals.
Going back to a time when digital was not yet king, mergers and acquisitions were tedious and required a forest’s worth of paper—paper that would get lost, degrade, and require constant space and care. ‍
M&As were becoming increasingly burdensome as businesses found their security and data needs expanding further and further.
Then, about a decade ago, came a revolutionary technological innovation: virtual data rooms (VDRs). Since then, VDRs have become an indispensable tool in mergers and acquisitions with users saying they save time, as well as optimize the deal tracking process and make it more secure.
Virtual data rooms are secure and confidential online spaces where those involved in a transaction—including buyers, sellers, attorneys and accountants—can upload, sign, review and store essential documents.
Companies usually set up VDRs when they are being bought or sold as part of their due diligence, and many have hailed them as a panacea to all their past M&A troubles.
One of the biggest issues with traditional VDRs is that they are expensive, up to several thousand dollars per company.
And, while that might not sound like a lot to everyone, when you are managing files for a portfolio of companies things can add up quickly and you can easily end up spending tens of thousands of dollars.
If you were paying loads of money for something that would just snap, fix all of your M&A woes, that would be one thing. But, unfortunately, that is not how traditional VDRs work. On the contrary, they require a lot of time to set up and, because they are usually set up on fixed deadlines, they sometimes need modifications that can be difficult to make on-the-fly. While still significantly better than old fashioned paper-based deals, Traditional VDRs are not without their problems.
Another major problem with many current and past deal tracking systems is that they focus solely on just one or only a few aspects of an m&a transactions also, many times, VDRs are not built to last through the entire transaction process.
There are a number of things that deal tracking software does to improve the merger and acquisition process. Here are five ways that efficient deal flow management software improves workflows, and overall deal tracking.
There can easily be ten or more internal team members involved in M&A transaction, plus third-party accounts and lawyers. An effective deal tracking system should enable teams to easily create, assign, and track tasks.
Using deal management software lets users add attachments, such as documents and files, directly into tasks for simple tracking. Teams are able to filter through tasks based on progress, assignee, due date, and more, allowing them to quickly find the task they need.
Some m&a transactions tracking software, such as DealRoom, ties project management capabilities with virtual data room features. This allows everything to stay on one centralized platform, instead of spread across Excel trackers, email threads, and traditional virtual data rooms. Not to mention protecting your excel files via password isn't recommended as a security measure.
Another benefit of proper m&a project management is the ability to communicate within the platform. Users can have comment threads directly associated with each task and team members can get notified when a task is updated.
One of the benefits of having a centralized digital space housing all transaction documents and players is that it enables you to collect data on who is doing what and when.
Deal flow tracking software gives teams data and analytics regarding all tasks and user activity throughout the entire transaction’s lifecycle. Teams have access to data such as which buyers are the most active, top viewed documents, task progress, areas of concern, and more.
This data can be coordinated into actionable insights that are used to make informed future decisions.
Tracking deals using tools like Excel, which are not integrated across parties, leads to the creation of work silos. Such silos can be catastrophic during an M&A because they can lead to poor communication and information not getting delivered to the right people.
A good deal tracking system must, therefore, be coordinated across teams and serve as a single unified space for all actions and interactions between all those involved in the project. Not only can internal teams communicate about the project, but external can contribute too.
For example, a due diligence request may require contribution from the buyer and seller. Deal flow tracking software allows both teams to communicate about the due diligence request in one centralized spot.
Some deal tracking software also integrates with additional modern tools such as Slack, a team collaboration tool, to further assist with communication and prevent work silos.
Deal flow management is important even before due diligence begins. The right management tool keeps everyone informed and provides a constant bird’s-eye view of the deal’s progress.
It helps teams organize what needs to happen next and ensures that everyone is keeping up with their tasks.
A good deal management system needs to make all of these things easy for you. This means that a proper deal flow system will provide its users with end-to-end support, helping throughout every phase of an M&A.
Some deal flow management systems even allow users to create labels such as “integration”, so teams can organize each phase and work on tasks in order of priority.
As aspect of deal tracking is knowing which phase a deal is in, and knowing what needs to be completed for each phase. Deal tracking software allows teams to manage each phase with the correlating team members and correct information.
Here are the primary phases involved in your typical M&A, all of which should be covered by your deal tracking system, whatever it may be.
The Preparation Phase
During the preparation phase, sellers work to make sure potential buyers understand and can see why their business presents a good opportunity. You need to have a deal flow system that gives buyers easy access to data and information that will allow them to quickly understand why and how your business works. This phase can last anywhere from a month to a year.
Marketing Phase
During the marketing phase, sellers contact interested buyers and ask for a further commitment by asking them to sign an NDA and, possibly, other initial documents. Ideally, these documents will be stored using a management system. This phase can last 1-2 months.
Due Diligence
During this phase, interested buyers are granted access to the data roomed so they can begin to review all of the necessary information associated with the merger or acquisition. This phase can last 1-3 months.
Binding Agreement
This is when the buyer and seller get into the nitty-gritty of the deal and come to agreements on all of the details. Properly organized and managed data rooms are particularly valuable during this phase of the transaction. This phase can last 1-2 months.
Signing And Closing
In the past, the signing and closing phase could get dragged out for weeks. But the right M&A management system makes getting the right signatures and finishing up your project a snap.
Post Merger Phase
This phase is critical to the ongoing success of the recently merged company. It is important that the system you were using during the merger can also be used to help organize and optimize the new company after the transaction so everyone can hit the ground running.
In order for the M&A process to stay organized and intentional, each milestone of the pipeline should have set entry criteria so it is clear when it is time to move to the next step.
Perhaps most importantly, an M&A pipeline should be a collaborative and efficient process, not merely steps to work through, in order to close deals that live up to their potential value on paper. Additional best practices for monitoring multiple deals at the same time include:
Luckily, these best practices can be easily put into practice by utilizing deal tracking software.
It is also important to note that many teams are working on more than one deal at a time. Deal tracking software enables teams to track more than one deal at a time on one platform, instead of using different data room providers for each one. (Virtual Data Room (VDR) Providers comparison)
Proper deal flow management software is vital to a transaction’s success. It keeps workflows organized and efficient, while still allowing teams to be thorough and collaborative.
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