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4 Signs Your Data Will Slow Down Your Merger

To be ready for a merger means being ready for a government second request for information. While not all mergers and acquisitions undergo this additional level of scrutiny, lack of preparation can put any deal in jeopardy. Without serious concessions and divestitures, there’s essentially no way to move forward should the Federal Trade Commission and U.S. Department of Justice determine a transaction would impede competition in the marketplace.

As set forth in the Hart-Scott-Rodino Antitrust Improvements Act, the U.S. government can submit a formal request for information from the parties involved in a merger or acquisition plan following the initial public filing. Called the “Request for Additional Information and Documentary Materials” and more commonly known as a second request, it can pack a triple threat of an unclear scope, a condensed time frame, and a make-or-break impact on your business.

If you find yourself in pursuit of a deal that’s flagged with a second request, here are four signs you won’t be ready:

1. You don’t have a data map.

Disorganization in general is a huge impediment for companies trying to get through a second request. Those with litigation readiness programs and strong information governance protocols will find themselves off to a good start. Sophisticated or not, you need to know how much data you have—and where it is.

2. Your data maps are outdated.

Data grows and spreads quickly. A data map from 18 months ago is better than nothing, but your company’s information is probably being stored in new places, in new ways, and by different people.

3. You don’t have an e-discovery platform at the ready.

We all think we know the pressure of a deadline on a huge project until we’re given 30, 60, or maybe 90 days to respond to an inquiry for millions of files from any number of custodians. This is far shorter than a litigation timeline, and each passing day is critical with huge sums of money on the line. You’ll need quick access to technology that can help you collect, process, review, and produce responsive documents.

4. You have no easy way to document the discovery process.

With second requests, the entire discovery process needs to be documented—what was collected from each custodian, the reasons behind collecting particular data, how data was processed, the date restrictions you applied, the search terms you used, how the review was conducted … you name it, it should be documented. You won’t have time to keep track of every detail, as so many pieces will move forward quickly under the tight deadline, so you’ll want those details to be continually logged for you.

Whether your company is actively making offers, is courting offers, or has never foreseen itself on the buy or sell side, it’s impossible to predict when the right opportunity will arise. A company with a strong sense of its data has a strong sense of its value going into a transaction, as a company’s value is inextricably tied to the knowledge and information it has generated.

The challenge is that there is even more of that data than you think.

There are plenty of reasons not to panic, and the first of those reasons is that e-discovery tools streamline the process. In my opinion, proactively addressing the four warning signs boils down to two initiatives:

  • Strengthening the governance of your information with an up-to-date data map
  • Building a relationship with an e-discovery software provider before you desperately need one

That’s really all it takes to get started. Each of those two initiatives is a journey in itself, as other authors on this blog have attested, but you have to start somewhere. Take a look at the signs in your organization to determine how much further you have to go.