M&A software is software that a company uses to buy another company: to find and track possible deals, to check the company it wants to buy, and to join the two companies afterwards. M&A stands for mergers and acquisitions. An acquisition is when one company buys another. A merger is when two companies combine into one.
Buying a company is a long project with many teams. It usually has three stages. First, the corporate development team, the team that looks for companies to buy, keeps a list of possible targets. Second, before signing, the buyer checks the target in detail. This is called due diligence. Lawyers, accountants and engineers check its contracts, accounts, tax records, staff and systems. Third, after the deal, the two companies must be joined: one payroll, one accounting system and one set of customer contracts. This is called integration. In many companies, all three stages are run on spreadsheets and email.
Here is a typical case. A diagnostics chain in Chennai wants to buy a smaller chain of 40 labs in Madurai and nearby towns. Its team tracks the Madurai chain in the software, along with 25 other possible targets, each with its size, its owner and the stage of talks. When talks begin, the software opens a due diligence checklist of about 400 questions. Each question is assigned to a team. For instance, finance checks three years of accounts, and legal checks the 40 lab leases. The seller uploads documents into a virtual data room, a secure online folder that only approved people can open. Every question, answer and document is tracked, so the buyer can see what is still open.
After the deal is signed, the software holds the integration plan, often a plan for the first 100 days. It lists tasks such as moving the 40 labs onto the buyer's billing software and payroll, each with an owner and a deadline. Managers can see which tasks are late.
M&A software works beside other finance tools. The price that the buyer offers depends on the target's expected profits, which are modelled in financial planning and analysis (FP&A) software. The target's contracts can be reviewed and moved into contract lifecycle management (CLM). After the deal, the new company's figures are added to the group's in financial consolidation, and its legal details are recorded in entity management software.
How is M&A software different from a virtual data room alone? A data room only stores and shares documents. M&A software tracks the whole deal, from the first list of targets to the last integration task.