Top 6 Reasons Why You Shouldn't Use Excel for M&A

In the fast-paced world of mergers and acquisitions (M&A), many companies are laser-focused on execution. Yet, according to McKinsey, 70-90% of deals fail to achieve their original objectives despite the best-laid plans leaving organizations with unsuccessful deals. 

One key reason for this failure is the reliance on outdated technologies, particularly Excel, for managing the intricate and dynamic processes involved in M&A.

Excel's widespread use is partly due to its ease of use. It's a tool that many professionals are comfortable with, making it an appealing choice for managing data and tasks. Additionally, Excel is either free or relatively inexpensive, which is beneficial for teams operating under financial constraints.

However, despite these advantages, the cons of using Excel in M&A far outweigh the pros.

Below are 6 major reasons why you shouldn’t be using excel for M&A-

1. Lack of Real-time Collaboration

One of the most significant drawbacks of Excel is its lack of real-time collaboration features. M&A deals require continuous updates and seamless teamwork, which Excel simply cannot provide. ‍

For example, when multiple team members need to update a shared spreadsheet simultaneously, conflicts can occur, causing data discrepancies and delays.

A professional in the field noted,

"Capturing all of the contacts from every phone call is challenging in Excel. Generating quick reports and sorting data to show different priorities or graphical depictions of our pipeline is cumbersome and time-consuming."

2. Manual Task Management

Static Excel sheets require manual effort for task management, increasing the risk of errors and slowing down the process. This manual nature can lead to significant delays in deal completion.

For instance, if a team member forgets to update a task's status, it can create confusion and redundant efforts.

An M&A leader shared,

"We're not really tracking activity. If we've had a conversation with someone, it goes on the spreadsheet, but there's no automated follow-ups. Reporting back to our board or private equity company is a manual exercise."

3. Inadequate Permission Controls

Managing access and permissions in Excel is challenging. The lack of precise control over permissions can lead to unauthorized access or data breaches, posing significant risks in the highly confidential M&A process.

For example, sensitive financial information might be inadvertently shared with unauthorized personnel, leading to potential compliance issues and security risks.

4. No Detailed Audit Trail

Excel does not offer a detailed audit trail, making it difficult to track changes and activities. This lack of visibility can lead to compliance issues and complicates the oversight of deal progress.‍

For instance, if a mistake is made in the data entry process, it can be challenging to identify who made the change and when, complicating error correction efforts.

5. Fragmented Communication

Communication within Excel trackers relies on external channels like email or messaging apps, leading to fragmented discussions and a lack of context. This fragmentation can cause critical information to be overlooked or misunderstood.

For example, key deal updates discussed in email threads might not be reflected in the Excel tracker, leading to inconsistencies.

One expert noted,

"What we're doing now is a mix of Excel and PitchBook. It is fine for managing a target list but it's not useful for reporting. We need richer data visualizations that are easy to customize and create."

6. Cumbersome Reporting

Creating dashboards and reports in Excel is a manual, time-consuming process. This limits visibility into deal progress and makes it harder to quickly assess the status of the deal.‍

For instance, compiling data from multiple sheets to create a comprehensive report can take hours, delaying crucial decision-making.

M&A teams often find themselves juggling multiple tools—Excel for tracking, Outlook or Gmail for communication, and SharePoint or Drive for document storage. This disjointed approach can result in inefficiencies and critical information falling through the cracks. For example, once a document is uploaded into Drive, an individual has to manually update the line item request and mark it as complete in the Excel tracker. This process is not only cumbersome but also prone to errors.

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Introducing DealRoom: A Superior Alternative

To overcome these challenges, consider using DealRoom M&A Optimization Platform, a purpose-built M&A platform designed to execute deals more efficiently and realize synergies sooner.

‍1. Centralized Pipeline Data

DealRoom centralizes all crucial deal data in one accessible, secure location. This ensures that all team members have access to the most up-to-date information at all times.

2. Enhanced Collaboration

DealRoom promotes real-time sharing of pipeline updates, ensuring that everyone is aligned and working efficiently throughout the deal process.

3. Automated Reporting

DealRoom enables quick, accurate data insights on pipeline performance without the need for manual report creation and distribution. This feature saves time and reduces the risk of errors.

4. Unified Diligence Hub

Gather all due diligence requests and data in a secure, centralized hub for seamless access and management. This feature simplifies the due diligence process and ensures that nothing is overlooked.

5. Centralized Communication

Foster transparent and efficient interaction among all stakeholders within DealRoom, reducing errors and increasing the speed of the deal process.

6. Streamlined Workflows

Streamline workflows for both sellers and buyers, promoting smooth information exchange and analysis. DealRoom's intuitive design helps reduce the complexity of managing M&A transactions.

While Excel might be familiar and cost-effective, its limitations can significantly hinder the success of M&A deals. By switching to a dedicated M&A platform like DealRoom, you can enhance collaboration, improve data management, and ultimately increase the likelihood of a successful deal. In the world of M&A, where efficiency and accuracy are paramount, using the right tools can make all the difference.

Our DealRoom customer, John Palusci, Division Director of Strategic Finance & Corporate Development at Bayada shares-

By embracing DealRoom, your team can move beyond the limitations of Excel and ensure a more streamlined, successful M&A process. To know more about DealRoom M&A Optimization Platform- click here.

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