26 FOCUS Virtual Datarooms Smooth online operations Removing time-consuming paperwork from the deal process can surely only be a good idea. ACQ Magazine looks at the benefits of Virtual Datarooms. due diligence documents in an online environment, ultimately negating geographic distance and time limitations, and extending your reach to the maximum number of potential buyers. "The ultimate benefit provided by VDRs is a method by which to retain control over their use. This is done through tiered security settings and encryption technology that allows administrators to oversee access even to downloaded files." PhilipWhitchelo isVice President of Product Marketing at IntraLinks, who have been at the forefront of VDR technology, creating the first in 2002 for the M&A process. "With a traditional dataroom it can take weeks to prepare and assemble documents into binders, all the while a business continues to operate and information changes," said Philip. "Even a well-organized paper dataroom can become inefficient and information Some might feel that thumbing through sheets of outdated. With multiple buyer agents combing through paper, no matter how well filed, in order to locate binders and folders, over time documents get misplaced, those important documents pertaining to an M&A disorganized or worse, removed intentionally or deal is a scene that doesnt belong to this century. unintentionally by a buyer." However, some who have been involved in mergers "Because of these issues traditional datarooms can & acquisition activity for a long time simply stick to create longer review times and complaints from buyers the process they are familiar with and might even of not having access to necessary information. And, if a be a tad technophobic. Those at the cutting edge of company completes a fiscal quarter during the review technology that aids the process are convinced that process buyers need to be updated, which may require Virtual Data Rooms are the way forward. a return visit to the dataroom if the information is too Saving time, money and, albeit to a much lesser extent, sensitive to be distributed by email or mail." the planet is surely of interest to anyone. In that respect, using Virtual Datarooms as opposed to traditional Security document folders will have an obvious attraction to "Despite best efforts and security, confidential those in the M&A fraternity. information can be misplaced or removed from a physical dataroom"Philip continued."With a VDR, access , Speed controls restrict who can see what documents and when. Tankut Eker Director of Business Development for Advanced security features ensure no unauthorized TransPerfect Deal Interactive, whose VDRs offer super printing, copying or downloading of documents. fast load times and a 24 hour service team, explained: And auditing trails track which documents have been "Virtual Datarooms can reduce the amount of effort reviewed by whom, virtually eliminating untraceable and resources spent on traditional paper exchanges, information leaks; reducing instances of compliance risk; shipping costs, and time lags associated with outdated and protecting tens of millions of dollars in value during paper data rooms. VDRs not only eliminate the need negotiations. for hard copies, but also the time and resources spent Syndicus Solutions are committed to offering managing documents, and providing secure settings for user-friendly solutions for capturing, managing and the due diligence process. protecting data that can save time and money. Director "VDRs are a collaborative solution that can accelerate Michael Reddy said: "The system is extremely secure - and simplify the M&A process by securely hosting you have full control over who can access the dataroomACQ September 2011
FOCUS 27 Virtual Dataroomsand which documents they can see. If a particular user other; the dataroom is available 24/7 from anywhere in theis not meant to see a document, he/she will not know world, with multiple individuals accessing the systemit exists." concurrently; full electronic audit trail supports effective Joel Lessem, CEO of award-winning deal room provider management of the process."Firmex said: "At a high level dealmakers should not be All companies agree that language is not a barriersharing large volumes via email, thumb drives, FTP, CD or when it comes to VDRs as Tankut Eker pointed out:courier. Its too insecure and inefficient. Nor should they "With the growing presence of cross-border M&Abe using freemium services (Dropbox, Google Docs) that activity, VDR providers have become aware of the need fordont comply with the highest level of security audits multilingual reconciliation and have made a goodand compliance. Its simply not worth having a breach of number of steps technologically to address this need. Forconfidential information." instance, our platform, Deal Interactive, provides a multilingual platform that is localizable in more thanOrganisation twenty languages so that users can long into the deal"Deal rooms are used for a buyer or buyers to perform room in the language of their choice."their due diligence on a pending large transaction," Joelcontinued. "The goal of Due Diligence is to identify any Reducing costsproblems that may be material to the business. When "The hard costs, related to real-estate, people resources,the information is not readily available or well organized, travel costs and logistics to set up and manage thebuyer uncertainty can develop. physical process are easily calculated, although they vary "Deal rooms help accelerate deals to close. Because it is greatly for each transaction," Joel explained. "And, there areonline, due diligence can now be done simultaneously by further cost savings that can be realized by working withdifferent buyers. This can significantly shorten the the right VDR partner. A subscription model thatdiligence timelines as multiple buyers can review encompasses the unlimited deals, pages, training anddocumentation without knowledge of other bidders support creates cost certainty."simultaneously rather than sequentially." "The market is growing, maturing and becoming "Law firms, investment banks and corporate deal much more affordable to use on a continuous basis formakers are, increasingly, licensing unlimited use data financial transactions and related diligence processes.rooms as part of their infrastructure so they can get Many corporations are adopting VDRs on a subscriptionclients organized from the start of the mandate through basis because they are regularly engaged in financialto the closing of the deal, rather than waiting for the last transactions and share large volumes of documentsminute to get a data room." with 3rd parties. Intermediaries are also subscribing on a Due diligence is certainly a key theme here and as continuous basis. I predict, for any organization engaged ina vital and lengthy part of M&A, many will no doubt financial transactions to not have a permanent andappreciate the ability to cut time without compromising unlimited use VDR facility in the future, they could findthe process in any way. themselves at a competitive disadvantage." "A virtual dataroom can greatly improve the efficiency Philip Whitchelo concluded: "Rather than maintaining aof the due diligence process, speeding up the time spent paper dataroom for several months so that teams haveto manage the transaction as well as providing greater sufficient time to review an assortment of information, acontrol over the disclosure process," said Michael Reddy, VDR allows prospects to access documentslisting several points: simultaneously through a standard web browser. The "The record of documents placed within the dataroom result is often shortened timeframes by as much as 50can be made to accord precisely with the document percent. Updated or supplemental information islist comprised in the draft Disclosure letter; you can be simply posted to the VDR and buyers are notifiedabsolutely sure that all visitors to the dataroom are seeing electronically—a process that takes minutes. And,the same set of documents, minimising duplication most best-in-class VDR providers can have a VDR up andand access to superseded documents; multiple buyers running in less than 30 minutes and offer scanningaccessing the system will be totally unaware of each services to put physical documents online." ACQ September 2011
28 FOCUS Virtual Datarooms Founded: 1996 Founded: 2006 • Virtual Data Room history: In 2002 created the worlds first • Virtual Data Room history: Since 2006 Firmex has been licensing virtual data room to support the M&A due diligence process. online virtual data rooms for corporate transactions, governance • Usage: Its roots are in financial services especially M&A, Debt and compliance matters. Capital Markets and Alternative Investments but its platform • Usage: In addition to financial transactions their software is also hasalso extended to multiple corporate use cases. used for an array of diligence and compliance related processes • VDR clients: Trusted by over 1 million individuals and counts such as financial audits and document-based reporting for over 800 of the Fortune 1000 as users including the top 50 compliance purposes. financial services companies and top 25 law firms in the world. • VDR clients: Investment banking, Legal, Private equity, Life • Security: SAS 70 Type II certified and successfully undergone Sciences, Real-Estate and Resources. more than 100 security audits by customers and independent • Security: SAS 70 Type II compliant data center facility hosted by auditors. Highest level of encryption applied and advanced SunGard, the same company that serves the worlds 25 largest security features ensure no unauthorized printing, copying or financial services firms. downloading of documents. • Speed: Complex new projects can be set up in minutes - pick a • Speed: Can have a VDR up and running in less than 30 minutes template, upload documents, select your users, and get to work. and offer scanning services to put physical documents online. • Quote: "In a nutshell, we are intuitive, affordable, and deliver • Quote: : "IntraLinks is a global Software-as-a-Service provider deal specific expertise." and has become a standard by which companies collaborate, manage and exchange their critical information in a secure, Firmex auditable and compliant manner." 110 Spadina Avenue Suite 700, Toronto, Ontario INTRALINKS M5V 2K4 44 Featherstone Street Canada London, EC1Y 8RN T: 44(0) 20 3371 8476 (EU) T: +44 (0)20 7549 5200 F: 1.888.688.4042 (NA) +44 (0)20 7549 5201 E: E: firstname.lastname@example.org W: email@example.com W: www.firmex.com www.intralinks.com Philip Whitchelo Joel LessemACQ September 2011
FOCUS 29 Virtual DataroomsFounded: 2010 Founded: 1992• Virtual Data Room history: The management has been • Virtual Data Room history: Expertise in delivering virtual delievering VDR for the last five to six years Datarooms over a five year period.• Usage: Stand-alone web based solutions for legal and financial • Usage: From scanning hardcopies in our world-class document firms, with audit, back up and other support options. management facilities to setting up user and admin roles based• VDR clients: Law firms, investment firms, oil and gas, mineral on clientsspecifications, around the clock. • VDR clients: M&A, legal, exploration and property management firms financial services• Security: Full permission based system giving clients total control • Security: TransPerfect Deal Interactives VDR hosting environment is over access and usage. SAS 70 Level II certified.This is the gold standard for safeguarding• Speed: Guaranteed fast delivery, with scanning and support, electronic data in the financial services industry. if required • Speed: The fastest load times in the industry and a service team• Quote: "Our experience in financial markets, legal services and that works around the clock. regulation enables us to match our clients needs quickly and • Quote: "Not only does Deal Interactive provide intuitive, effectively" web-based document repositories, but it can also insure that all aspects of multilingual transaction support is comprehensive,Syndicus Solutions Limited accurate, and effective"Rotherfield House7 Fair Mile TransPerfect Deal InteractiveHenley-on Thames 120 Fenchurch StreetRG92JR 3rd FloorT: 0118 375 0465 London EC3M 5BAE: firstname.lastname@example.org T: 0044 (0) 207 398 8200 F:W: www.syndicussolutions.co.uk 0044 (0) 207 398 8202 E: email@example.com W: www.dealinteractive.com www.transperfect.com Michael Reddy Tankut Eker ACQ September 2011
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