Mergers and acquisitions (M&A) transactions with virtual data rooms remain one of the main ways of developing and maintaining the competitiveness of companies in developed and emerging markets. 

The Main Task in Organization of VDR for M&A Deals

Despite the growing interest in the efficiency of mergers and acquisitions in emerging markets, due to the limited availability of data, the study of transactions within individual developing countries has received relatively little attention. As a rule, the structure of synergy and the factors influencing the creation of its individual components are not studied. Thus, the analysis of the factors creating synergy and the assessment of its structure in domestic transactions are of considerable interest.

To prepare data room m&a, the following tasks are set:

  1. First, consider different ways of assessing the individual components of operational and financial synergies based on an analysis of the financial statements of the companies involved in the transaction. 
  2. Secondly, to analyze the structure of synergy for individual periods of development of the M&A market. 
  3. Third, on the basis of regression analysis, determine the most significant factors for creating synergy for domestic M&A transactions.

Some authors define merger solely as a voluntary change in the organizational and legal form of an organization, and takeover as a similar process carried out without the consent of the absorbed entity or forcefully on A merger is a combination of two or more organizations that decide to combine their property, assets, liabilities in common interests in order to increase efficiency, profitability, sometimes to reduce competition; unlike a takeover, a merger takes place with the consent of the parties. As a result of the merger, a new company is created, in which all the property of the companies is included.

Synergy in Preparing the Online Data Room for M&A Deals

Synergy in the case of M&A deals is usually understood as the added value created as a result of the merger of the two companies, which opened up new opportunities for the combined company that was not available to companies separately and increased its competitiveness. In the literature, there are two main types of synergy – operational and financial.

Operating synergies enable companies to improve cost efficiency or increase operating profit from existing assets. Two main types of operational synergies are quantified. First, there are economies of scale that come from the post-takeover enlargement and lower unit costs. Secondly, the strengthening of the market position, which occurs when the large players in the industry unite. The deal results in less competition and an increase in the market share of the combined company. The company is expected to respond to reduced competition by raising prices for key products or services in order to increase revenue.

Financial synergies include tax advantages, new investment opportunities for leveraging free cash, and increased stability in the company’s cash flows. Three main types of financial synergies are quantified:

  • tax savings that arise when the merger uses tax considerations to offset the accumulated losses of one of the companies and reduce the amount of future income taxes;
  • new investment opportunities (investment opportunities) that arise from the implementation of profitable projects that companies could not implement one by one;
  • increasing debt capacity. Debt capacity increases if the company’s future cash flows after the M&A become more stable and predictable. This type of financial synergy manifests itself in the reduction in the value of the company’s debt after the transaction.


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