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The Value Virtual Data Rooms Brings to your Transaction

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The Value Virtual Data Rooms Brings to your Transaction

In essence, a virtual data room is an online space used for sharing highly sensitive data. In many instances, information shared is also time-sensitive.

Virtual Data rooms have built-in security features, analytic tools and Q&A coordination modules.It is these features that have proved to be critical in projects for specific domains such as conducting due diligence in the capital markets industry, sharing clinical trial data, and exchanging document in litigation matters.

The business benefits in using virtual data rooms are numerous. Here, we outline how data rooms are useful:

1. Improved Information Security

Our clients use virtual data rooms to securely share information with internal and external parties. The need for security is a top priority, especially in confidential transactions such a mergers & acquisitions, IPOs, biotech licensing and partnering, real estate purchase and sales, and more.

So how does a project data room fit in?

For starters, users who sign in have to accept a Non-Disclosure Agreement. Project managers can turn on this NDA feature each time a user logs in, or for only the initial login. Users also have limited access to documents. In the Docutone Virtual Data Room, users assigned a ‘Read Only’ permission is only provided a view-only access, with no access to print or download.

Together with document watermark features, file encryption and two-factor login authentication, these tools help prevent confidentiality abuses & security violations, and meets strict legal compliance requirements.

2. Be In the Know of Users and Documents

Docutone Virtual Data Room provides pre-built reports for a better understanding of how a project is progressing. Reports are based on two viewpoints: users and documents.

User Reports As a project manager, you will have access to reports to show the most active project users, coverage access and the number of times they have viewed a document. A detailed user audit trail is available which includes login times with corresponding IP addresses and actions performed.

Document Reports The most or least viewed document report delivers insight into information that is deemed critical by users. Also available is the document history report, which highlights all major actions related to a specific file.

3. Speed Up Your Transactions

With intensive activities carried out during these transactions, users experience time savings by having documents accessible easily, at all times.

Document Index Dynamic indexing allows for ‘late’ documents to be added to a data room and inserted in the appropriate folder with an auto updated index number. Your file structure remains well organized, at all times.

Q&A The Q&A module greatly enhances communication between parties. No longer do you need to manage queries manually via Excel. In M&A transactions, buyers can ask sellers questions related to the transaction and its contents securely & efficiently. Parties can keep track of the questions’ status, easily attach related files, assign only specific group members to pose questions, designate subject matter experts – all capabilities which significantly improves question management.

For managing time pressure, large transactions, auction-type processes with large number of buyers and complex cross-border due diligence, virtual data rooms remain a best practice tool in handling the sharing and control of critical information.

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Virtual Data Rooms for Private Placement

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Virtual Data Rooms for Private Placement

 

A Docutone DataRoom is more remarkable than mere data. In complex transactions, such as private placements, distinctive software and processes can even point out who the main players are.

In May 2018, Singapore logistics company Mapletree Logisitics Trust raised over SGD $200 million selling private placement shares with proceeds funding the acquisition of logistics properties in China. Such a complex transaction would have presented a number of challenges, not least of which is how to balance practical efficiencies with transparency and security. Here, we take a look at some of Docutone’s best practices.

 

VDR case study in a private placement

Initial assessment: Financing options may include private placements, for which analysts have to review large volumes of documents. The VDR set-up helps you to collate and share this data with specific users. A company seeking financing uploads documents into indexed folders. Data is safely encrypted and managers can track user-engagement to ensure that their analysts are on the mark with due diligence.

Marketing a deal: If a private placement is preferred, an information memorandum is prepared for potential investors. These could well be competitors, which requires extra care when sharing information. A private equity firm using a VDR would present a ‘key’ to potential investors to review documents. The VDR tracks user engagement and can run reports on the most active users – those reviewing financial documents and more likely to emerge as the main contenders to be prioritized.

Negotiations: During negotiations, multiple internal and external teams will perform due diligence while crafting their terms and conditions. With a single platform for document management, all parties can quickly access the latest document versions, and also new documents being added. The final drafts may be published in the VDR for disclosure.

 

As deals close, advisory firms open a separate VDR for investor reporting. Private equity firms and investors value transparency, and firms that handle buyer and investor expectations with integrity gain the upper hand. All this is now possible with a powerful platform, the Docutone DataRoom.

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Managing Information During the Bidding Process

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Managing Information During the Bidding Process

You’re a financial advisor in a merger and acquisition (M&A) transaction for a Chinese client seeking to invest overseas. Your client sends its team consisting of members from its corporate finance and legal departments, in addition to foreign legal counsel to review the due diligence process. You have to coordinate the foreign team, the decision-makers based in China and the sellers.

How do you manage the information flow? What can you do to be more competitive during the bidding process?

 

M&A in cross-border transactions

When dealing with a cross-border M&A, bringing together international buyers and sellers, dealmakers are tasked with executing the transaction competently, seamlessly and quickly. Docutone DataRoom connects all parties in real-time to professionally manage the due diligence process.

A VDR is an industry best-practice tool used to share and monitor documents as they are filed for scrutiny, and control the flow of information to protect the privacy of the parties concerned. It is commonly used in regulated industries, especially in the capital-markets space for efficient due diligence for complex transactions.

So how does it work?

As an advisor to this deal, you create a VDR branded under your firm’s or your client’s company name. You then set up the VDR index where potential overseas sellers can upload their documents in an organised way. Setting up a well-planned index means that you can easily check if the seller has provided all due diligence documents needed for review.

When all the documents are in place, your clients can go through their due diligence process in a systematic way. Your deal moves quickly. Question-and-answer forums are streamlined and secure. Sellers can also rest assured that their highly sensitive information is being handled with discretion and without breaches.

Especially with cross-border transactions, it is vital that data access is seamless within and outside China. Overseas sellers must be able to upload their documents to the VDR with speed where the decision-makers in China can access these documents securely and without any delayed connectivity issues. Docutone VDR is built for a global user base, with speed and connectivity guaranteed regardless of a user\’s physical location.

 

A record year for Chinese M&A 2018?

As analysts look to strong outbound deals in technology, industrial and consumer products, it remains critical that financial advisory firms address due diligence processes competently, using new technologies and best practices.

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Implementing an E-Bible Migration Strategy

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Implementing an E-Bible Migration Strategy

 

E-bibles (or document bibles) are commonly used by legal firms to organize case documents to share with clients at the end of a deal or to store within their internal libraries.

As Chinese law firms start to store their e-bibles in the cloud, they have brought along with them their clients in adopting best practices of storing, indexing and deep searching of large volumes of documents.A project with many moving parts, we recommend adopting practical project delivery best practices with these 3 key topics:

  • Digital and Print Merging 
  • Data Management for Classification and Indexing
  • Project Implementation Process
 

1.  Digital and Print Merging

Optical Character Recognition (OCR) technology is key in delivering print to digital documents.  As many final documents contain company stamps and signatures and supporting documents being in hard copy, applying OCR software to digital documents should come hand-in-hand from the start of a project. The goal is to fully convert paper documents to being 100% text searchable documents.

2.  Data Management for Classification and Indexing

Even when hard copies are text searchable, a pain point for many is that a search process is often inundated with search results that may not be relevant. In many cases, you will need to speak to someone familiar with the transaction, if they are still around, to identify your required documents. While not ideal, this is the reality of most document searches. Classification by deal type and keywords for indexing sets the basis for easy searching. In addition, executive summaries should be revisited and updated if necessary, to be concise and to allow readers a rapid appreciation of the transaction content. As transactions get more global in nature, it is best to have keywords and summaries in both English and Chinese.

3.  Project Implementation Process

The key to ensuring that project sponsors and stakeholders achieve their desired outcome is to conduct a Conference Room Pilot (CRP) earlier in the project implementation phase. Key users will be able to visualise the process and results, while the project team identifies and addresses gaps. CRP2 prior to User Acceptance Testing (UAT) and finally the End User Training is also vital. With training, users will easily locate, view and print the information they need – and use the e-bible as a dedicated and reliable reference source.

 

Taking it a Step Further with Analytics

With a treasure trove of data in their hands, firms not only solve the issue of easy sharing and access, but can also take the opportunity to use their data in spearheading future data analytics projects down the line.

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Setting Up Your Data Room – The Essential 5 Steps

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Setting Up Your Data Room – The Essential 5 Steps

For first time users, setting up a data room may seem like an intimidating task. Here is a five-step process to ensure that your set up is smooth and quick.

1. Appoint a project manager

A project manager is responsible for coordinating the data room, from ensuring that documents are uploaded to setting user access rights. A typical M&A transaction would consist of the buyer and seller teams and their respective legal and financial advisors, tax consultants, etc. For a sell-side M&A, a financial advisor could take on this position and manage the documents and also communication with bidders in the data room. When the deal is closed, the data room will be archived and a complete audit trail of disclosure available to the client.

2. Prepare your non-disclosure agreement (NDA)

To access a data room, all users are required to agree to the NDA which governs the usage of the data room prior to being able to access documents. Either prepare your own NDA or use the Docutone NDA template provided as a default.

3. Set up your document index structure

Data room indexing structure varies by type of transaction and industry. Docutone offers a quick-launch virtual data room with populated folder structures for the project manager to get started quickly and easily when importing corporate documents. See sample index set up:

4. Organize users and determine access permissions

This critical stage is where you handle the document control in relation to your index structure. Organize users according to their companies and/or roles, then assign permissions. Once this stage is completed, we highly recommend the project manager to verify assigned permission sets by logging in to the data room as a participant.

Assigning permissions means more than just restricting access. Disable copying, sharing, printing and saving in permissions management.

5. Assign Q&A lead handlers

In project transactions, Q&A (questions and answers) questions regularly arise in relation to documents disclosed for review in a data room. In such circumstances, it is pertinent to assign users Q&A roles, i.e. ‘questioners’, ‘answerers’ and ‘lead handlers’ as users get on to the Q&A forum to send out questions or receive, review and address answers in throughout the course of the deal’s lifecycle.

It typically takes just one deal to get familiar with the process of setting up a data room for project transactions. With this in your pocket, your deal team will be on the way to securing a professionally branded and easy-to-use data room to managing the due diligence process.

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M&A Due Diligence Best Practices – Accelerating a Deal while Maintaining Security

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M&A Due Diligence Best Practices – Accelerating a Deal while Maintaining Security

It is standard practice today for advisory firms to use email to distribute confidential information memorandums or seller’s books when handling a sell-side M&A deal.

Seller’s books are mailed to a large number of potential buyers, and at first glance, emails may seem adequate to share documents. However, beyond simply disseminating information, what professional advisors have been doing is taking this a step up by accelerating the deal process and providing deal intelligence and secure access for their clients. Here is where a virtual data room (VDR) comes in.

A VDR balances the need to speed up a transaction while maintaining security during a disclosure process.

When Marketing a Transaction to Multiple Buyers

Let’s say you are marketing transactions to potential buyers, some who could even be the seller’s direct competitors. In instances like this, it is essential to disclose information that is highly confidential while taking care of sharing access is a controlled manner. With a VDR, granular access for users are set, meaning advisors and sellers control bidder access to documents – so that if the mood changes during negotiations and a deal is called off, sellers can immediately shut down data room access to specific buyers.

Keeping an Eye on Buyer Interest

The audit trail is another feature that is commonly used by sellers. Advisors and sellers have the ability to monitor every bidder’s movement within the data room and gauge interest levels among potential buyers. With this insight, advisors can accelerate the deal process and manage communications with only serious bidders. Extremely sensitive information would be disclosed during the final stages of negotiation when it is clear which bidders are serious about making a deal. Advisors can better manage their clients and close a deal quickly.

According to a report¹ by the Austria-based Institute of Mergers, Acquisitions and Alliances, a VDR has definite advantages for:

  • Larger transactions
  • Auction-type processes with a large number of potential buyers
  • International and cross-border transactions
  • Transactions in which a limited period exists for due diligence

The use of VDRs have become a standard best practice among capital market professionals in the U.S. and European M&A markets over the past 6-7 years and is gathering momentum in Asia. With Chinese companies looking at closing M&A deals worth over US$100 billion in 2016, we expect a busy rest of the year ahead.

References

Do virtual data rooms add value to the mergers and acquisitions process? Dr. Christopher Kummer and Vlado Sliskovic, IMAA Institute (2007)