While not every M&A professional is on the same page about which deal stage drives the most value, almost everyone can agree that in order for each stage to be successful there has to be high quality data, transparency, and communication. When leaders have a bird’s-eye-view of each stage of a deal, they can make better informed decisions and keep the deal process flowing.
DealRoom is an M&A lifecycle management software solution specifically designed for M&A. Deals can only achieve the most post close value when those involved on the deal had access to high quality information. DealRoom was specifically built to optimize M&A workflows and enable every deal team to have efficient access to the information they need.
We recently interviewed Kison Patel, Founder and CEO of DealRoom and M&A Science about DealRoom’s functionalities and the M&A tech tool pain points it alleviates. Mr. Patel is the author of two books, “Agile M&A: Proven techniques to close deals faster and maximize value” and “M&A Tactics Handbook: Advice from Corporate Development Practitioners for Each Stage of the Deal Lifecycle”. Kison is also a member of the Forbes Technology Council, an invitation-only community for CIOs, CTOs, and technology executives.
Mr. Patel, we are happy to have you. Let’s start with why DealRoom was created in the first place
My pleasure, thank you. So, during my time as a M&A advisor, I kept seeing the same issues come up during diligence. And unfortunately, these recurring issues caused actual delays during deals.
What were the recurring issues?
Typically both sides were highly cooperative and everyone involved wanted to close the deals as soon as possible. However, everyone was in broad agreement that the virtual data rooms that we were using for each transaction were, how shall I put this…inefficient. And this wasn’t just one virtual data room provider. We kept hopping from one to the other, but each time we were running into the same issues.
Understood. What was it missing, from yours and your colleagues’ perspective?
It seems like every data room was designed to answer the following, “how do we store data safely?” But the problem was, when you are going through diligence and need to use a virtual data room, there are tasks associated with a large majority of the files being stored. So, yes, virtual data rooms solved the safe data storage aspect, but nothing was around to solve the project management aspect for each stage of the deal. My deal teams were always very frustrated with going back and forth between Excel trackers, worrying about version control, answering duplicate requests, etc. We needed something that still solved the secure data storage problem, but that also solved our other pain points.
Another issue was that during integration we were having to recollect information that was previously collected throughout diligence. The virtual data rooms have no way to tag a file for future use.
So, was this the lightbulb moment?
That’s one way of putting it! I started reaching out to other DealRoom teams and interviewing them on their M&A technology pain points too. It was pretty clear, we all needed some type of project management tool, but it had to be mixed in with a virtual data room.
Got it. You needed something more intuitive
That’s exactly it. Data rooms were extremely revolutionary when they first came out, but that was also a few decades ago. Deals are done differently now, and they move along a lot faster.
The experiences of those I interviewed, along with my own, led me to think about a platform which was more intuitive and could compress the deal timeline.
Is DealRoom an accelerant during transactions?
I think so, and I would say our customers do too. The platform combines diligence, pipeline, integration, and document management, all in one place. So, for example, we’ve had customers tell us that they completed due diligence in half the time because they could complete all the diligence requests in one place, instead of splitting the time between Excel, a traditional VDR, and email.
There is also a feature that allows requests to be tagged for later on. If something is collected during diligence that will be important later on during integration, teams can tag the request or document as “integration”. Then when it comes to the integration stage, teams can easily reference back to anything tagged as “integration” instead of having to dig around through hundreds of emails to find what they need.
It’s an important function
Well, without it, the buy side is sending emails back and forth, wondering if they’re asking the right person for the data. Let’s suppose you want to see the selling company’s IP. Without the request function, you don’t really know whether you should be asking the CTO or the legal counsel. The request function overcomes that uncertainty and puts the ball in the court of the sell side.
I see. Do your users utilize DealRoom as a communication platform?
Like mentioned before, the platform combines diligence, pipeline, integration, and document management, but it also allows teams to communicate during all deals stages within the platform. Users can tag each other, add comments, track communication threads, etc. This prevents users from having to go back and forth between long email threads and Excel trackers. Everything can be in one place. For example, for each diligence request, teams can set an assignee, reviewer, follower, due date, and priority. Just think about how many emails that alone prevents! And then if anyone does have a question, they can simply tag whoever they need to and ask the question within the request.
Do your users provide feedback? Even more so, do you guys listen to the feedback?
I wish my engineers were here to answer this question! Short answer, absolutely.
We have very open and honest dialogues with our customers on what they like and dislike about the platform, areas that need improvement, and features that are missing. Even the templates you see in the platform for each phase of the deal (legal due diligence, financial due diligence, HR due diligence) were driven from client feedback. I credit a lot of our best features to our customers. I look at it this way, our customers are the ones using the platform, why would we not listen to them?
Does DealRoom sell into any specific industries?
Our platform is industry agnostic, we’re really seen it all. At the end of the day our goal is to optimize M&A workflows, no matter what type of transaction or deal size. We work with corporate development teams, investment bankers, private equity firms, law firms, start ups, and investors, you name it. Teams have managed buy side deals, sell side deals, divestitures, SPACs, etc. on the platform, and some even use it as just a data room. We don’t recommend only using the platform for data storage but we’ve seen it happen.
How big are the teams that use DealRoom?
We see companies and teams of all sizes using DealRoom as their lifecycle management provider. One reason this is possible is due to our pricing model. We wanted to leave per page pricing in the past. If a team only has two members and is working on a small transaction, we have a plan for that. If a company comes to us for more of an enterprise plan roll out and does five transactions a year, we have a plan for that. Our pricing is designed to be transparent and prevent surprise invoices.
It sounds like DealRoom is very adaptable and customizable
To be frank, it’s the best platform out there for adaptability. There are so many specifics and nuances in M&A, no two deals look the same, and we want the platform to be as flexible as possible. Since the platform is cloud-based, it can be scaled up or down depending on the amount of data needed and users involved.
Understood. What type of technology or innovative updates does DealRoom have planned for the next coming year?
Right now we are really focused on expanding the pipeline management reporting features. Corporate development teams rely on pipeline management to manage all their deals simultaneously. It makes everyone’s lives easier when they can just spin up deal stage reports, progress tracking, revenue models, etc. There will even be the option to schedule specific reports. We are hoping to release the new features by the end of Q3.
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