VDR for Strategic Transactions & M&A

M&A deals can overwhelm buyers and sellers, burying them in an avalanche of paper, repeat requests, and wait-time. In fact, many of the challenges inherent in M&A dealings (corporate governance and securities laws, regulatory hurdles, tax considerations, disclosure obligations, antitrust issues, etc.) are only enhanced when one is attempting to conduct business across national and cultural boundaries. Furthermore, any language barriers between dispersed stakeholders and investors will only compound these challenges. These often unmanageable tasks, leave too much room for error, steal valuable company time, and can kill deals. However modern Virtual Data Rooms like DocullyVDR are designed with M&A in mind can allow stakeholders to work more collaboratively, effectively, and efficiently throughout the lifecycle of a deal.

The more advanced VDRs like DocullyVDR also offer a host of additional features that can streamline your operations even further:

Advanced Organizational Features
VDRs offer a variety of organizational features that can significantly speed up the process of managing, searching for, and organizing documentation. Instead of searching around boxes and papers, buyers can find the information they are looking for and retrieve electronic filings by simply typing in keywords or by browsing the VDR’s index. Logical indexing within the VDR facilitates the location and retrieval of the desired documentation. Some VDRs even have a drag and drop feature that allows for the easy reorganization of files. Furthermore, a well-designed user interface will minimize extra mouse-clicks and data entry screens, allowing users to get to the information they need quickly and easily.

Multi-lingual User Interface and Documentation
One of the latest advances in VDR technology is the multi-lingual user interface. This feature can be especially helpful during cross-border transactions in which sellers and buyers may not all be fluent in the same language. When the user interface is customized to the user’s native language, they are able to navigate the VDR more quickly and with greater ease.

Document Management
It’s not uncommon for M&A transactions to involve hundreds if not thousands of pages of documentation. And in some cases, this documentation may only exist in hard-copy form. Most VDR providers offer scanning services as part of the VDR set-up process to ensure all documentation is available in digital format in the virtual data room. They can also help the client with organizing the documentation in a logical format so that stakeholders can easily find what they need within the VDR’s index. Artificial Intelligence is used in VDRs for M&A in order to help analyze and organize files. This not only improves workflow and organization, but also offers the ability to adapt to new information and changes throughout diligence. Again, thinking ahead to integration, AI allows companies to accumulate valuable data that can offer business benefits in the future. 

Eliminate work (specifically redundant work): The more sophisticated VDRs designed for M&A often allow users to eliminate work through features such as automatic elimination of duplicate requests, bulk dragging and dropping of documents, full-text searches, and auto-indexing, as well as the ability to assign tasks, live link documents, and produce reports with the click of a button.

Reduce distractions: The previously mentioned features related to workflow and organization not only eliminate work, but also curtail hazardous deal distractions for overworked management teams. 

Administrative Controls: The VDR administrator (usually the seller) can set viewing restrictions that allow buyers to see only those documents that are relevant to them. This level of usability allows buyers to maintain their focus and allows them to make informed decisions more quickly. Also, when a buyer submits a question to the seller, the administrator can decide whether to answer this question privately or make it available to all users in the FAQ.

Multiple Layers of Security

With all of the sensitive information that’s passed around during the M&A process, it is vital that you select a VDR provider that offers extremely tight security controls. Here are some of the things you should look for:

• Hosted in SSAE 16 SOC 2 / ISO 27001: 2013 facilities – the gold standard for safeguarding electronic data in highly regulated industries
• Documents can be read only, stored securely inside the application’s in-line viewer, preventing buyers from copying, saving or printing content
• Dynamic watermarks containing forensic information allow sellers to track user’s actions (such as when they printed a document)
• Ability to track user’s activity remotely and revoke access to a particular document, even one that’s been downloaded to the user’s hard drive
• Viewing restrictions for selected documents by individual users or groups, enabling administrators to release content on a piecemeal basis as opposed to all at once
• Optional click-through user-definable confidentiality agreements with audit trails

Provide an overview of the entire process: Some higher-level VDRs for M&A allow for a bird’s eye view of the entire process. This takes the VDR into the realm of project management as this overview is very useful in terms of seeing where team members are spending the most amount of time, analyzing the buyer’s engagement, identifying and responding to potential problems or roadblocks, and tracking overall progress.

24/7 Customer Support: When you’re conducting business across multiple time zones, 24/7 customer support is essential. Now, some VDR providers offer 24/7 help desk support to enable users to get their questions answered in a timely fashion.

Conclusion
Perhaps the greatest advantage of the VDR is that it allows sellers to entertain multiple buyers at once. Factor in all of the time-saving technologies mentioned above, and it’s clear that VDRs can be major game changers. In fact, it is estimated that, on average, the use of VDRs for diligence purposes shortens the duration of deals by 60 days or more-and as the old saying goes: “time is money.” What’s more, as cross-border transactions increasingly become the norm rather than the exception, having the added levels of transparency that VDRs can provide will help smooth the cultural and linguistic differences between players from divergent cultures. In this tumultuous economy, these seemingly minor advantages can be the difference between failure and success and provide some refreshing piece of mind.