Paper Paper Everywhere? Welcome To The New World Of Online Due Diligence
Paper Paper Everywhere? Welcome to the new world of online Due Diligence
by Chris Robilliard
Financial transactions are part of a companys life-cycle, whether its an M&A, IPO, diversification or capital raising - the ability to complete comprehensive and robust due diligence can make or break successful execution of that deal. With the current squeeze on lending, speculation on trading in developing economies and volatility in global markets, companies entertaining potential investors must present their assets in the best possible light.
Companies also do not want to build additional and unnecessary costs into their transaction. Traditional paper data rooms, for example, are extremely costly and have severe limitations, with geographic constraints in attracting bidders and limited access to perform due diligence effectively. Physical data rooms are administration-heavy and time consuming to maintain on the sellers side. Investors demand that they complete their due diligence in an efficient and effective manner.
Asset Readiness
Experts advise dealmakers to expect to spend more time on thorough due diligence preparation in the current economic climate. Investing time in this area can prevent issues that may cause investors or buyers to reconsider their investment, cause a lender to withdraw support, or even change the level and cost of financing in light of late disclosure of information.
The due diligence process is best managed by providing full disclosure in as transparent and efficient a way as possible. Letting buyers discover issues on their own is invariably a bad approach; this may cause them to wonder what else they might have missed. Unexpected turns can result in renegotiation, lower valuation or complete withdrawal from a deal.
Leading Companies are maximising their deals with Virtual Data Rooms
Increasingly, corporations are pro-actively taking the lead in selecting Virtual Data Rooms for their due diligence processes when organising financial transactions, which is not surprising as they are usually around 6% of the cost of a paper data room, and can be set-up with thousands of pages of content available in just 24hrs or less. Companies that want to showcase their asset or present their sale in the best possible way are choosing Virtual Data Rooms to package and promote their deal to achieve a quicker and better outcome.
Benefits of a Virtual Data Room
Virtual Data Rooms (VDRs) offer a secure and highly efficient method for sharing critical business information for electronic due diligence in M&A advisory, IPO and secondary offerings, asset purchases, venture capital due diligence, bio tech licensing, commercial and corporate real estate ventures, financial restructuring, preparing for exit strategies, and many other transactions that require large amounts of document sharing.
Benefits include:
Cost savings - The clerical, staffing and security costs associated with hosting a physical data room are eliminated. Instead, you invite multiple participants to a secure, confidential, online environment that is easily accessible and cost-effective. There is no IT or hardware investment required; no additional software installation; and client data is maintained on the VDR providers server. Prospective parties then simply access information via a highly secure desktop viewer.
Speed to market - Another advantage of using a VDR is the speed a transaction can be brought to market, while ensuring the security and integrity of a deal. VDRs can be set-up in a fraction of the time it takes to piece together and assemble a paper data room. Thousands of pages can be indexed and loaded online in a matter of hours. This, in turn, enables accelerated due diligence review, as users login to a secure web browser at their convenience, cutting down transaction time and dramatically reducing expense.
Increase number of potential buyers - One of the big benefits of a Virtual Data Room is that potential buyers or investors, in any global location, can start to dig into the depths of a companys documentation early on, from the comfort of their own office. They can spend as much time as they like looking at the data. They may still want to come out and visit the seller, but when they do, discussions are directed toward specific documents and issues, and the result is much more fruitful meetings.
Real-time visibility into viewer activities - With Virtual Data Rooms sellers know exactly what is being viewed and by whom invaluable intelligence for gauging interest, intent of participants and setting high-level strategies on engaging with interested parties.
Full disclosure - Site managers for the VDR can control user-wide access, giving permissions to view, download or print documents, as they deem appropriate, which means VDRs provide a fail-safe disclosure.
Detailed audit reports show exactly what information has been viewed, by whom and when. This mitigates the risk of non-disclosure claims once a transaction is complete. And it doesnt end there, far from a physical data room that needs to be dismantled or re-housed once an acquisition, for example, has taken place, a VDR can be maintained by the new organisation to reference HR, Legal, Financial and other contractual information...all in readiness for the next time it is needed and the next big deal.
Making the right Decision
What should companies be looking for in the selection of their VDR for a Financial Transaction?
Easy set-up with logical indexing
Quick upload of documents (no matter how many and how large the files)
Enough control to allow advisors to review documents before they are published
The ability to secure sensitive documentation, containing valuable IP or Patent Technology, for example
The ability for visitors to perform key word search, not only on titles but anywhere in a document
An option to invite potential investors and buyers to the Virtual Data Room and then track their activity to page-level in order to understand genuine interest and intent
Functionality to answer potential questions in an integrated forum, with the ability to assign questions to experts
Finally, expert Project Management and 24/7 customer service, to eliminate any admin or IT burden
Financial dealings are the life blood of a vibrant and buoyant global market, no matter what transaction is being planned or where it is taking place in the world. Robust due diligence ensures a more successful outcome, so companies cant afford to be left behind drowning in paper; when they can float with the aid of a VDR.
About Merrill DataSite
Merrill DataSite is a secure virtual data room (VDR) solution that optimizes the due diligence process by providing a highly efficient and secure method for sharing key business information between multiple parties. Merrill DataSite provides unlimited access for users worldwide, as well as real-time activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service - all of which help reduce transaction time and expense. Merrill DataSites multilingual support staff is available from anywhere in the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours or less.
With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organization-wide discipline in the management and processing of confidential content. Merrill DataSite is the first VDR provider to understand customer and industry needs by earning an ISO/IEC 27001:2005 certificate of registration the highest standard for information security and is currently the worlds only VDR certified for operations in the United States, Europe and Asia. Merrill DataSites ISO certification is available for review at www.datasite.com/security.htm.
As the leading provider of VDR solutions, Merrill DataSite has empowered nearly 2 million unique visitors to perform electronic due diligence on thousands of transaction totaling trillions of dollars in asset value. Merrill DataSite VDR solution has become an essential tool in an efficient and legally defensible process for completing multiple types of financial transactions. Learn more by visiting http://www.datasite.com today!
For more information, please contact Merrill DataSite: Tel: 1-866-399-3770; Email: info@datasite.com; Web: http://www.datasite.com
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