Best practices for remote due-diligence

The pandemic in 2020 caused a major upheaval in the circumstances for mankind and forced us to change the manner in which we approach life in all areas, and more particularly in the workplace. Companies had to switch to a remote mode of working for survival, they were forced to adapt, and as it turned out, it worked out quite well for most of them. The number of online transactions increased markedly, thanks to modern technology. But to succeed in such a remote environment you have to take other measures. Some of the best practices for remote due diligence include:

Make sure you invest in the right technology for your business

Secure Virtual data rooms are an indispensable aid during the remote due diligence process. With their help, companies can invite third-party users to verify the company’s financial and legal records in absolute safety. The best virtual data room providers like DocullyVDR with its robust security features, can provide you a secure data storage and file sharing platform. For years Docully VDR have made it possible to conduct legal and financial due diligence remotely, allowing users to securely share confidential documents with other companies. But now that in-person meetings and site visits aren’t always possible, more technology is needed so operational and environmental due diligence can also be carried out remotely. Video also helps replace the face-to-face interaction that has always been a pivotal piece of the due diligence process. Building trust with any potential business partner is imperative, especially when millions or billions of dollars are at stake. This is where a secure data storage and file sharing platform like DocullyVDR can play a huge part to accelerate the due diligence for every deal, with its featuring advanced technology, bank grade security, enhanced sourcing, automated setup capabilities, easy file management and integrated artificial intelligence for organizing and analyzing documents. From mergers, acquisitions and divestitures to financing and corporate restructurings, it’s industry-leading deal data rooms are better, faster and smarter!

Prepare for a longer due diligence process timeline

Everyone knows that due diligence is a lengthy process, even when done live. This is because both companies want to be sure of each other’s integrity as well as the value of the transaction being conducted.
Remotely, this process can drag on for an even longer period. This can happen due to various unforeseen causes, system failures, internet connection problems, and other technological errors.  Also due to the current sensitive and fragile market conditions, buyers will be taking a closer look at the seller’s infrastructure to see how it has changed during this difficult time, which extends the process as more information must be exchanged and reviewed. Thus the due diligence process and exclusivity periods are now often 90 or 120 days instead of 60 days in the pre-pandemic era.

Greater confidentiality and security concerns

When any business operations are conducted digitally, security issues become more acute.  Everyone involved in due diligence should be aware of your security policies, and only share sensitive data when necessary. You should invest in programs that focus on protecting sensitive data, like secure deal rooms. The best data room services like Docully VDR have multiple layers of protection and bank grade security features that minimize all risks of data leakage, they use encryption, dual authentication, detailed and permission-based access and user-roles, document watermarks, audit logs. All of these features help you remain in control of the file sharing process, and limit the fallout if any documents are accidentally shared with unauthorized users.

Engage With the Right People

Connecting with your would-be business partners is essential during remote due diligence, especially if you’ve never met in person. While some businesses are already familiar with each other, with relationships that predate the pandemic, many others are only “meeting” for the first time.
Reaching out to your existing network – such as entrepreneurs, venture capital firms and co-investors – can help do much of the legwork for you. These connections can provide references and verify a company’s reputation, making it less likely that the deal will fall through. In the absence of such a network, you can also call on M&A advisors and lawyers to handle specific parts of the due diligence process.

Have Organized Meeting Agendas

Having an organized, clear, pre-determined meeting agenda, and adhering to it strictly, ensures that all participants will efficiently share their information and concerns. Since holding virtual meetings lowers the barriers to attendance and enables more people to participate, ensure that every meeting has a detailed agenda will help keep things on track and on time. The key players in a deal should communicate early and often, including video meetings whenever possible. These meetings should discuss topics such as progress updates and risks that have surfaced during the process. The key players in a deal should communicate early and often, including video meetings whenever possible. These meetings should discuss topics such as progress updates and risks that have surfaced during the process. Expect that you’ll spend more time in meetings during remote due diligence (as discussed above), especially if you’re not already familiar with the other business. This may include repeated conversations with key players, product and tech demos, and informal discussions to get to know others involved.

Communicate with potential partners more often

Communication is key to the success of any deal, more so in remote due-diligence and so this communication should be as responsive as possible. You should be more diligent in your modeling and analysis because we live in a time of economic instability. You have to recognize which indicators are temporary and only related to the pandemic and which problems are deeper.
These best practices in remote due-diligence will go a long way in smoothening the virtual due-diligence process.