Web-Based M&A Spreadsheets
If you’re like most people in M&A, you’ve probably used web-based spreadsheets where you can easily collaborate with your team and see the changes others are making in real-time. Truth be told, I was one of those users and thought, “Wow, how cool is that?” I could see comments people left and the edits they made without emailing files back and forth. What could be better?
Everything was working great, until one day we opened up a spreadsheet and all our hard work was GONE! We tried to recover data from previous versions to no avail.
This got me wondering if others have had similar experiences. My research revealed some troubling findings, which I’ve summarized below by category.
Loss of Data
I was curious if ours was an isolated incident, so I ran an online search. What I found was far worse than I expected. As it turns out, there are numerous reports of lost data. Without naming any specific companies, below are just a few examples of what I found. Keep in mind that these are exact quotes from users, but I removed any reference to company names.
“suddenly today morning I found all sheets are clean and my all data are missing”
“Today I open the sheet and it’s reverted to a version from November 2019! Over two months of data has just vanished. Gone!”
“Our Department (22 members) is using … sheets for our WFH (Work From Home) Logbook (e.g. Daily Plan, Daily Output). Everyone with the link can edit their own WFH Logbook. However, yesterday we found that some cells belong to some of our members were disappearing.”
The list of complaints goes on and on, enough to fill hundreds of pages. As it turns out, there are hidden dangers lurking in these web-based spreadsheets.
Inadequate Security for M&A
What really happens when you share a link with someone else? How do you know if that link hasn’t been accidentally forwarded or shared with the wrong person? There are few controls in place to ensure the integrity and security of the information.
Confidentiality is a critical aspect of due diligence. Receiving sensitive, personally identifiable information (PII) requires strict access controls, or you risk a potential security breach that can cost your company not only financially but a loss of reputation. No matter how careful you are, do you really want to take the risk of exposing yourself and your company to potential litigation? M&A due diligence is a process that entails highly sensitive information and these web sheets or docs simply don’t provide what is needed to ensure security.
Insufficient Version Control
Here’s another perspective. Let’s say a seller responds to a request using one of these web-based tools, and you’re reviewing their responses. What prevents the seller from changing what s/he entered AFTER you completed your review. Your findings will have been based on the information as it was entered at the time you reviewed it. Certainly, you can disable the shared link, but what if you forget? If you’re managing multiple deals, it’s not a matter of “if,” but “when” this will happen. Especially if you’ve shared the link with multiple people on the seller side. You have now lost control of the versioning and integrity of your process.
Face it, these web spreadsheets and document tools are clearly not a safe and secure way to manage a due diligence process.
Purpose-Built M&A Tools to the Rescue
The only way to preserve the necessary governance and control over the flow of sensitive information is to use a purpose-built tool for this type of use case. Due diligence is a dynamic process that requires flexibility and security, and integrity of the information you exchange with the seller. An effective due diligence collaboration tool will provide you with a safe and secure environment from which to run your due diligence, letting you sleep better at night so you can focus on what matters most.
Connect with one of our M&A experts to see how Devensoft solves these issues!