Still using Excel in M&A? 5 Reasons Why Successful Acquirers Are Abandoning It for Better Tools

Microsoft Excel, a flagship product of the Microsoft Office suite, has been an integral part of the business world since its introduction in 1985. Originally created as a simple spreadsheet program, Excel revolutionized the way businesses performed calculations, organized data, and presented information. Its grid-like interface, combined with powerful formula and charting capabilities, made it an instant hit across industries.

Over the years, Excel has gone through numerous updates and iterations, each adding new features and capabilities. From basic arithmetic operations to complex statistical functions, Excel has expanded its repertoire to become more than just a data entry tool. The introduction of features such as PivotTables, advanced filtering, and macro programming made Excel a multifaceted tool capable of handling a wide variety of data processing tasks.

However, despite these advances, the core functionality of Excel has remained largely the same. It is essentially a digital ledger, designed for broad applications but not specifically for any single, specialized task. This generalist nature of Excel, while a strength in some scenarios, is where its limitations begin to surface, particularly in the context of mergers and acquisitions (M&A).
M&A transactions are inherently complex, involving vast amounts of data that require not only organization and analysis, but also a level of dynamism and security that goes beyond what Excel was designed to handle. The need for real-time collaboration, reporting, and rigorous data security are just a few aspects of M&A that challenge Excel's capabilities.

As we move from a world dominated by static data and standalone tools to one that demands connectivity, real-time insight, and specialized functionality, the reliance on Excel for M&A activities seems increasingly anachronistic. In the following sections, we will examine specific reasons why Excel, despite its storied history and widespread use, may not be the most effective tool for managing the complexities of modern M&A transactions.

1. Inadequate collaboration capabilities: Although recent updates have improved Excel's collaboration capabilities, it still does not support real-time, seamless collaboration or in-context communication. Excel lacks features such as per-cell commenting threads that would allow stakeholders to discuss data points directly within the document. This shortcoming often results in multiple document versions and data inconsistencies, which can delay decision-making in time-sensitive M&A transactions.
2. Vulnerability to Human Error: Excel's manual data entry process and the complexity of its formulas increase the risk of human error in the M&A context. Given the high financial stakes, even small spreadsheet errors can lead to significant miscalculations that impact valuations and risk assessments. This risk is compounded by Excel's lack of rigorous auditing capabilities, which increases the likelihood that errors will go unnoticed.
3. Difficulty handling complex data sets: Excel struggles with the large and diverse data sets typical of M&A transactions, resulting in performance issues such as slow response times and crashes. This not only hampers the analysis process, but also creates the risk of data corruption or loss - significant liabilities in the M&A context.
4. Lack of built-in data security: Excel's security measures are inadequate for the sensitive nature of M&A transactions. Basic password protection does not protect against data breaches or unauthorized access. The lack of advanced security features such as encryption, access logs, and customizable user permissions puts sensitive data at risk when shared over networks or via email.
5. Lack of Audit/Change Log: Excel does not provide a comprehensive audit or change log, which is essential for tracking changes, maintaining data integrity, and ensuring accountability in M&A processes. Without an audit trail, it becomes difficult to track errors or verify the reliability of data.
6. Lack of workflows: Excel lacks native support for workflows, such as locking cells or sheets to prevent changes during critical review phases. The lack of workflow capabilities makes it difficult to systematically manage data validation and approval, increasing the likelihood of errors and compromising the overall integrity of M&A analysis.
7. Inadequate advanced permission controls: Excel's basic security settings do not meet the needs of M&A transactions, which often require restricting access to data based on user roles or transaction stages. The inability to hide certain columns or sheets from certain users increases the risk of inadvertent data exposure, compromising the confidentiality and security of the transaction.
8. General-purpose nature: Excel's general-purpose design lacks the specialized features required for M&A transactions. Customizing Excel for specific M&A tasks, such as deal structuring and due diligence, is time-consuming and error-prone. Its generic framework requires the creation of specialized functionality from scratch, which is inefficient for M&A processes.

The limitations outlined above underscore the need for more specialized, efficient and secure tools for M&A, such as smartmerger.com. Our platform is tailored to the unique challenges of M&A transactions and provides:

1. Contextual collaboration tools: The platform enables discussions anchored to specific data points or documents, improving team cohesion and accelerating the decision-making process in M&A transactions.
2. Comprehensive audit and change logs: Unlike Excel, smartmerger.com provides detailed audit trails and change logs that increase transparency, accountability, and traceability throughout the M&A lifecycle.
3. Advanced Workflow Management: smartmerger.com supports sophisticated workflow features not found in Excel, including data lock during critical review phases and structured routing of tasks through pre-defined approval processes.
4. Granular Access Controls: With advanced permission settings, smartmerger.com ensures that sensitive information is accessible only to authorized personnel, enhancing data confidentiality and compliance.
5. Real-time data analysis and reporting: The platform facilitates real-time data analysis and reporting, providing timely insights and comprehensive reports critical to informed M&A decision making.
6. Advanced M&A Toolset: Our Rest API allows us to Integrate with other business systems such as ERP and CRM platforms, creating a a unified ecosystem for efficient M&A management, reducing manual data transfers and the associated risk of error.

The shift to specialized online M&A suites like smartmerger.com represents the future of M&A management. Our platform provides a comprehensive, secure and efficient alternative to Excel that addresses the unique needs and challenges of M&A transactions. By harnessing the power of smartmerger.com, companies can navigate M&A with greater confidence, accuracy and success. To view a live demo or access a free trial, please contact us at hello@smartmerger.com.