We are often asked why a data room is necessary for an M&A process when low- cost file-sharing platforms like Dropbox or Google Drive are available.
While they do a great job of making it easy to upload and share files, they do not offer the security, accuracy or time-saving features needed to manage M&A transactions.
From the due diligence to completion, data rooms are specifically built for this purpose. They allow controlled file-sharing to select groups of people in a way that is efficient, secure, and completely auditable in a time critical manner.
BENEFITS OF USING A DATA ROOM:
24/7/365 Hands-on support
Data rooms are easy to use, but also come with around-the-clock support so you can get an answer to a technical question, or even delegate any data room administrative tasks you do not have time for.
As soon as your deal is underway, you will be thankful for having a well- informed expert on the other end of the phone, ready to help you out.
When it comes to sharing the wrong document with the wrong person, the stakes are especially high during a deal. Because data rooms are built specifically with this concern in mind, they come armed with some serious safeguarding features.
For example, you can:
restrict document access, even within your internal teams;
select where in the world you want your data hosted; and
add expiration dates to files, meaning they are automatically deleted from a user’s computer by a certain date.
Selling a business requires more than exchanging data – at its core it is about communicating well with your potential buyers. Data rooms have in-built Q&A modules that allow you to easily manage the flow of information between your bidders and your business’ experts.
As all of this communication is stored in the data room, it is protected by additional security, with customised approval workflows and is fully auditable.
Being able to store your data somewhere is important but understanding how people are engaging with it is critical. With a data room, you can pull reports on any activity – from who is logging in, all the way down to which pages of a document they have been reading.
Every file in an index is numbered in a data room, which makes referencing very simple compared to the file-sharing platforms. This will save you an infinite number of headaches during the disclosure process, when the deal is done.
Protecting sensitive data
The ability to protect sensitive information is important. For a lot of deals it's vital not only during the deal period, but also during the due diligence phase. A few data room providers like Sterling are offering redaction capabilities. To have this feature within the data room will not only make the process easier, faster and keeping the data secure, it’s also a reassurance to stay compliant.