Technology has revolutionized the way we approach tasks across all industries, and the creation of the virtual data room (VDR) in the M&A space is no exception. VDRs have transformed the way due diligence is conducted, exponentially advancing the security, efficiency and velocity of the process from the era of the physical data room.

However, even with the advent of VDRs, dealmakers today still have large swaths of data to sift through, as the increased scope of due diligence runs the gamut from regulatory and compliance issues, to intellectual property concerns. Merrill Corporation's data shows that the average number of pages uploaded to VDRs grew by 40 percent between 2017 and 2018, and is continuing to grow. This is the reality dealmakers are up against, and why so many are excited about using artificial intelligence (AI) and machine learning (ML) to enhance the accuracy and speed of document upload, indexing, and review processes, some of which are already being researched and tested today.

For all this initial progress on streamlining the due diligence process itself, we are still some steps away from using AI to identify potential M&A targets and track the information affecting their business models. In the meantime, there are some simple ways to track your due diligence activities to keep your deals positively moving forward. To stay ahead, don't make these five mistakes.

1. Lack of Preparation

As with most activities, poor preparation can lead to poor performance. When this happens in the M&A due diligence process, poor planning can easily kill a deal. Dealmakers must be thorough and not rush this phase. In the past, checking financial and legal documentation was considered a thorough job, but today due diligence routinely covers documentation across topics ranging from human resources, information technology, environmental impacts, sustainability, regulatory and compliance concerns, commercial or market intelligence, tax, insurance, property, intellectual property, customer data and operations. This increased access to information has created its own set of challenges and hurdles that affect the due diligence speed. In fact, recent research shows that 30 percent of global deal makers see document self-organization and project management as the most significant due diligence challenge. Since the best buyers are always one step ahead, it's important to take advantage of the due diligence application prep and take time to provide the right information to a potential buyer. Checklists, such as the one on General Data Protection Regulation (GDPR), can also aid preparation.

2. Failing To Allocate Time Effectively

Although it's critical to speed up the transfer of a company from one owner to the next, research predicts the due diligence process will take less than three months on average to complete by 2022. If you don't allocate enough time to collect, organize and review your documents, you will have trouble covering all the bases. On the other hand, if due diligence is unnecessarily prolonged, deal fatigue can set in, increasing the likelihood of both parties walking away from the transaction. By setting aside the appropriate amount of time, M&A practitioners can strike a balance between efficiency and thoroughness.

3. Falling Afoul of Regulation

Antitrust and data privacy regulations have added another layer of complexity to due diligence. Research shows that M&A professionals believe GDPR is the second most likely factor to sink deals, behind national security and antitrust regulations. Using a VDR that is EU-US Privacy Shield certified to conduct your due diligence process can help ensure your activity's compliance. Additionally, tools found in some VDRs, such as Q&A management, can provide audit trails that are useful if a deal encounters problems and leads to litigation.

4. Inefficiently Indexing Information

The increased volume of pages uploaded to VDRs requires a sophisticated method of indexing files. Failure to adequately place all this information in the right files can prevent buyers from receiving the right materials. Conversely, the seller can also fail to promote critical business information that can help get a deal over the line. Of course, this is an area where technology is able to assist. For example, Merrill is currently researching and testing the use of AI and Natural Language Processing (NLP) to help index files in its VDR and ultimately make the due diligence process more efficient while cutting out low value tasks.

5. Inadequate Security

Protecting sensitive data from the threat of a security breach without obstructing information sharing is crucial to deal management. Investing in VDR systems that provide access controls with an array of authentication and permission options, ensures data security and deal control. Systems such as two-factor authentication can provide added assurance that only those with granted access will get into your deal.

Technological advances have made due diligence more efficient, and the process will continue its transformation as new solutions arise. AI and NPL will surely cut down time consuming tasks such as file indexing and redaction, which will save dealmakers critical time. Still, to really make the most of the promise of these technologies, it's crucial to plan, give yourself enough time, and ensure your process accounts for changing compliance and security strategies.

Todd Albright is global chief revenue officer for Merrill Corporation, a leading global SaaS provider for professionals in the M&A community, that helps power secure, intelligent due diligence and enterprise collaboration for thousands of deals in more than 170 countries.