MergerMarket recently published a study on content management throughout the M&A process (the Report), interviewing several business executives who shared their thoughts on the key role of content management in the timing and closing of M&A transactions. The Report highlights the biggest challenges in managing M&A transactions, as well as risks associated with improper content management:
- Diligence – In managing content, users must grow accustomed to the security and access controls available via virtual data rooms (VDR). The need for security is especially pertinent in the context of a merger of a publicly-listed company, where risks related to improper content management could have adverse effects on share price.
- Post-diligence issues – There are risks related to how data is used and shared after it is downloaded from VDR. As users log onto VDR, download content and save it locally on their hard drives, sellers and financial advisors lose control over information. Meanwhile, having security settings that do not allow users to download documents is unrealistic in a process where several users need to evaluate information. Unlike paper copies, it is difficult to ensure that electronic files are destroyed or returned.
The M&A process represents a large time commitment for dealmakers, lasting months or even years. The Report highlights how managing content can make or break a deal. Attempting to align several parties on a variety of different systems provides challenges to both seller and buyer resources. The Report recommends an additional platform to support the deal process – Content Management Systems (CMS). CMS are typically easy to use and have both intuitive and customizable user-interfaces. CMS ensure that users are not limited to one workflow option or content structure. CMS can also allow working groups to collaborate on documents in a secure environment – anywhere – making them especially useful in cross-border M&A. Key stakeholders can comment or share their work, making coordination much more manageable. Finally, CMS also provide for encrypted storage systems, heightening user security.
The author would like to thank Sam Zadeh, articling student, for his assistance in preparing this legal update.
Norton Rose Fulbright Canada LLP
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