Mastering Acquisitions the Modern Way
Modern deal processes: How VMware can go from LOI to close in 21 days
“We started the term sheet, then within a few days it was a full-on pandemic and everyone went into lockdown,” said Mills, Associate General Counsel and Senior Director of M&A and Investments. But despite the restrictions, the team was able to move ahead quickly with the acquisition.
“The team got together on the fly and got the transaction done in a way we hadn’t done before. We missed that human element of the in-person negotiations, but we were able to operate our M&A process remotely and signed the deal on May 12th – it closed a few weeks later.”
Mills and his team run anywhere from 6-10 acquisitions a year on Deal technology platform Ansarada and were able to successfully close 7 deals in the ‘unprecedented’ year that was 2020.
“Our Corp Dev team did not miss a step during COVID, they just kept cranking out great strategic acquisitions. It was impressive how everyone came together to work at that pace, despite all the other things going on with lockdown, kids at home, financial stress – all of it.”
Down to a fine artSo what’s his secret to mastering the art of the acquisition? Standardizing and centralizing all processes using Deal technology and enabling the team to mitigate risk, drive decision making and to move with speed, clarity and certainty.
“All our different deals are viewable in the Ansarada portal; you can log in to see 3-4 different deals, all right there. People know where to go, what folders to look in, and where their materials will be. From the early days, that’s one thing that helped us streamline our diligence process,” said Mills.
Using Ansarada Deal technology, VMware is able to run multiple processes simultaneously across a single purpose-built platform. Having a single source of truth for all data in real-time allows them to closely monitor progress and prioritize the most promising opportunities.
By standardizing on a technology platform, VMware has developed best practice. With this centralized deals space, the teams at VMware can get full visibility over targets’ documentation and highlight any risks or potential showstoppers early on, before they have the potential to put deals or reputations at stake.
“Having good clean data that you can review is critical. It's the stuff you don't know about that bites you - those unknown risks - so having a good diligence structure helps you understand if the company is disciplined and how they are organised,” said Mills. “You can tell a lot about a company's culture just about how organized they are coming into the M&A process.”
3 weeks to closeCentralizing all their deal processes from the earliest stages enables VMware to execute deals in a fraction of the time it took previously - in as little as 3 weeks.
“We’ve had a lot of success with smaller teams with more experienced sources to get those done quickly. A lot of it comes down to preparation - clearly defining what are the due diligence goals, what is the base case you are going in to validate. It’s about setting the stage properly and leveraging these new technologies to move faster and get better data analytics to drive decision making,” said Mills.
“Our corporate development team has gotten really good about having a clearly defined scope of what the key go/no go decisions should be for each transaction, and having the specialist teams execute against them to move as efficiently as possible.”
Legacy processes don’t suit scaleManual contract management and gathering of documentation is incredibly time consuming when done via email and spreadsheets. Amid the back-and-forth, information gets lost. Chasing down targets is frustrating. Target companies aren’t prepared quickly enough. Progress is hard – if not impossible – to ascertain.
“It's hard to imagine life before Ansarada in a lot of ways. All the features & functionality we like about Ansarada didn't exist at the time; we were using 2-3 different VDR providers before ultimately standardizing on Ansarada as a serial acquirer. It’s helped getting that data into the data room down to a science,” said Mills.
The future of AI dealmaking“For us, it’s having this ‘hub’ for an M&A transaction where all the data is residing in Ansarada so you can have workflow possibilities, help people manage workflow automation and make sure everything gets done, everything has been reviewed,” said Mills.
“We are going to see AI keep getting better and better. AI technology is already great today for accelerating contract review of standard customer and partner agreements. Within the next 2-3 years, it will become excellent at reviewing much more complex agreements and will fundamentally change how companies conduct their due diligence process. AI in combination with the tools from Ansarada allows us to run dashboards and analytics on top of the data room, so the team can go back and compare what they have done in different transactions to adapt and improve our process for future deals and do a better job of assessing risk.”
VMware uses integrations between Ansarada and other AI contract review software, like LinkSquares, to speed up the analysis of targets.
“When you talk to legal teams about the tech they use, more often than not they are using general productivity tools like Microsoft Word and cloud-based storage platforms – not tech that is purpose-built for a legal team's needs,” said Vishal Sunak, CEO and Co-founder of LinkSquares. “We’re seeing a really interesting shift in the legal industry where in-house legal teams are actively evaluating technology and things like AI to automate manual processes. LinkSquares gives them the tools and data they need to be more proactive and set their business up for success.”
“Technology is an integral tool for companies to achieve that next level in their growth and trajectory. Ahead of an acquisition, fundraise, or IPO, they have to be able to pull out all this meaningful data and analysis, and prior to technologies like Ansarada and LinkSquares, that could only be solved with a lengthy, manual process,” said Sunak.
Changing the game for high-growth companiesWith 53% of US executives planning to increase their M&A investment in 2021 according to the PWC US Pulse Survey (Nov 2020), outpacing the competition needs to be a key priority for buyers.
“For high-growth companies developing at scale, a platform like Ansarada is incredibly beneficial. By automating manual tasks and standardizing the processes around information governance, these companies can safely speed up these transactions and close more high-value deals,” said Ansarada CEO Sam Riley.
Modern dealmakers are harnessing technology to automate manual tasks, digitize and streamline workflow, and standardize deal processes across all stages of the deal lifecycle in order to act fast and scale for growth. And companies like VMWare are way ahead of the game when it comes to an agile and centralized acquisition strategy.