How cloud computing is revolutionizing M&A

Cloud computing is revolutionizing the M&A industry. Cloud computing is paving the way for quicker and more efficient mergers and acquisitions. It’s leading to faster IT integration, better data interchange, and better document exchange while providing a real opportunity to realize significant cost savings both during and after the M&A.


Faster IT Integration

The move to cloud computing and the subsequent abandonment of traditional IT data centers has changed the way M&A IT integrations are handled. If both companies involved in the M&A are using the same cloud services, the integration can be handled very quickly without many hassles. The IT integration may be as simple as handing over the passwords and usernames to the cloud account as the acquisition becomes final.

In cases where different cloud services are used, companies involved in the M&A can choose to migrate from one cloud service to another. Since many of the same systems are used across cloud services, moving VMs and containers between cloud services can be handled over encrypted internet links. This ensures that data is protected and remains confidential.

Even in a merger of two companies with legacy data centers and legacy programs, cloud computing can be utilized to make the transition go more smoothly. A cloud platform can be used where existing systems are transferred to the cloud. Redundancies can be reduced and systems can be integrated.

When Hess Corporation divested itself of a large portion of its retail marketing business, they utilized cloud computing to handle the transfer. They utilized automated systems to create hundreds of servers to host their company data. All systems were transferred to the cloud. When it came to complete the sale of the assets, Hess Corporation was able to hand over the keys to the cloud servers in a short 30 minute meeting. It took only a few weeks to do what would have previously taken months to complete without the power of the cloud.

Virtual Data Rooms

Before the advent of the cloud and virtual data rooms, physical data rooms would be set up for mergers and acquisitions. These data rooms allowed physical access to documents and data related to the company and the M&A. They featured secure physical access to the different participants so that due diligence could be completed. While still widely used, virtual data rooms have risen to fill an important void and have begun to replace physical data rooms.

Cloud computing has provided the tools needed to create virtual data rooms. A company can set up a secure site that is only accessible to those with proper credentials. Documents and data can be put on the server that the other party can view. This provides transparency for both parties in the M&A negotiations. If the M&A negotiations end, access can be cut immediately to the virtual data room.

Virtual data rooms can be more quickly set up than physical data rooms. In fact, the bidding process can be reduced by an average of 30 days. Documents and data are transferred electronically to the virtual data room, and there is no physical transportations of documents. This reduces the time needed to perform due diligence vs. physical data rooms. Any reduction in time results in a corresponding reduction in M&A expenses.

There are several secure data companies that handle setting up these virtual data rooms on the cloud to ensure that they comply with any applicable laws and regulations concerning M&As. Companies are rapidly moving to virtual data rooms because they provide cost savings and arguably provide better document and data access options.

Chance to Realize Cost Savings

Cloud computing is just not revolutionizing the M&A scene during the M&A phase but also in the months following the M&A. Cloud computing is known to save money and make company IT departments more nimble and efficient. One of the biggest roadblocks for moving to the cloud is the fear of disruption during the transition. When it comes time to combining two disparate systems, there is already disruption in combining the systems so that roadblock vanishes.

Without the disruption roadblock, companies can embrace the cloud. They can put all of their data resources from both businesses on the cloud and then integrate them together in a way that takes advantage of their new synergies. As mentioned earlier, integrating systems on the cloud can save time and money. Redundant systems can be reduced. Cloud benefits like elastic computing power, elastic bandwidth, and rapid content delivery are readily available with cost efficiencies when newly merged firms move to the cloud.

The growth in cloud computing has revolutionized M&As, but the revolution is just beginning. Mergers and Acquisitions will continue to take advantage of cloud computing technology and find uses for new cloud services. Between better IT integrations, better document and data interchange, and post M&A cost savings, it’s no wonder that cloud computing is having a revolutionary impact on M&As.