Company mergers and acquisitions (M&A) involve complex processes with lots of moving parts and potential roadblocks. From due diligence to integration, there are many stages of the M&A process where things can go wrong, causing deals to fail. However, one tool that can help mitigate risks and support a successful merger and acquisition integration is a strong records and information management (RIM) program.
In this article, we’ll explore the link between RIM and M&A, and review how a strong RIM program can help support your M&A activities in terms of maximizing deal value, minimizing roadblocks, mitigating risks, and streamlining integration.
The Link Between Records Management and Mergers & Acquisitions
First, let’s take a closer look at the link between RIM and M&A. RIM is the practice of identifying, organizing, maintaining, and accessing information assets throughout their lifecycle. This includes everything from physical documents and files to digital data and information systems. A strong RIM program can help organizations manage their information assets efficiently and effectively, ensuring that information is accurate, accessible, and secure.
During the M&A process, information plays a critical role in due diligence, valuation, and integration. It’s important to have a clear understanding of what information is stored where, how it’s stored, and what its potential value is. Having a strong RIM program in place can help ensure that all necessary information is identified, organized, and accessible— minimizing risks and maximizing value.
Maximize Deal Value
One of the most important ways that a strong RIM program helps to support M&A activities is by maximizing deal value. During the M&A process, potential partners need to have a concrete understanding of what information your organization has and what it’s worth. An accurate understanding of where your records and information are located instills confidence in any potential partners, which can translate into more value that’s able to be negotiated.
However, before any due diligence activities take place, it’s critical to have a handle on what’s stored where, how it’s stored, and what its potential value is. Whether it’s a hard drive or a box of physical records, until you know exactly what’s inside, it has no value. From inventory and customer records to billing and employee records, when the data requested during due diligence is provided quickly and accurately, it instills confidence with a potential buyer. This, in turn, makes it more likely that the deal will proceed successfully.
Due diligence is a critical part of any M&A process, but it’s also the most time-consuming. Any additional time added to this stage of the M&A process can rack up legal and internal expenses quickly. Fast and efficient sharing of information during this stage is crucial. Moreover, you’ll want to be sure that it’s accurate and up to date.
This is where having your information management team or external professionals involved as early as possible in the process is beneficial. Not only are they likely to have the most complete knowledge about what information is stored where, but their specialized knowledge can accelerate the process– a huge advantage.
However, it takes more than just a rockstar team of RIM professionals to have a solid information management program. Due diligence can take hundreds of billable hours from attorneys and employees months’ worth of time to complete. To minimize this roadblock, you’re pressed to manage all your information across its lifecycle in an integrated fashion.
You can dive deeper into that topic by reviewing our integrated information management roadmap.
With privacy law enforcement on the rise, cybersecurity, and data breaches are becoming a top risk factor— both before and during M&A processes. To mitigate these risks, both parties should first establish a way of sharing information, such as a data room or secure document management system. It’s also recommended to have a complete assessment done early in the process to determine:
- How and when will information sharing occur?
- What are the requirements of the M&A agreement?
- How will the chain of custody be managed?
- Will there be auditability of information access?
- Which documents are critical to due diligence?
- What are the compliance and privacy considerations?
Streamlining Merger and Acquisition Integration
When two companies merge, they bring together their respective records and data systems. This can result in a complex and time-consuming integration process, especially if the records and data are not well managed. A strong records management program plays a crucial role in streamlining the integration process by providing a structured approach to managing the records and data of both companies.
A strong records management program can help identify duplicate or redundant records, enabling the integration team to prioritize the consolidation and management of the most critical data. This can result in significant time and cost savings, as well as the reduced risk associated with data inconsistencies or errors.
Additionally, a well-structured records management program helps to ensure that the merged company has a clear understanding of its data assets, enabling it to identify opportunities for improvement and innovation. This allows the merged company to develop new products, services, or business strategies based on a more comprehensive understanding of its data assets, providing a competitive advantage in the marketplace.
Having an organized and optimized RIM program is not only helpful for M&A processes but also for day-to-day operations. Digitizing key business documents and having them in a securely sharable format can make business processes run smoother and prevent unauthorized access or release of information.
Read our Mergers & Acquisitions Playbook, Managing Information Through Transition, for more details on how to ensure your corporate information is ready to withstand the rigors of information-sharing requirements.