This document discusses the importance and benefits of adopting a virtual data room (VDR) technology for companies in emerging Asia Pacific markets. It outlines the risks of failing to implement a robust VDR solution, such as increased risk of data breaches, inability to meet international compliance standards, and high risk of materials disclosure litigation. The document recommends following best practices from established markets, such as choosing an enterprise-grade VDR with full security and audit features. Adopting a proven VDR like Merrill DataSite can help companies in emerging markets mitigate risks, ensure compliance, and drive faster, better transaction outcomes.

1. MANAGING
RISK WITH
THE VIRTUAL
DATA ROOM
WHAT EMERGING APAC
MARKETS CAN LEARN FROM
ESTABLISHED VDR SUCCESS

2. MANAGING RISK WITH THE VIRTUAL DATA ROOM MERRILLCORP.COM 2
MANAGING RISK
WITH THE VIRTUAL
DATA ROOM
Contents
3 INTRODUCTION
3 EMERGENCE OF DIGITAL BUSINESS DRIVING THE
GLOBAL MARKETPLACE
4 THE RISKS OF FAILING TO ADOPT VDR TECHNOLOGY
6 VDR BEST PRACTICES FROM ESTABLISHED MARKETS
6 LEVERAGING A PROVEN VDR SOLUTION TO DRIVE FASTER,
BETTER TRANSACTION OUTCOMES
7 THE MERRILL DATASITE DIFFERENCE

3. MANAGING RISK WITH THE VIRTUAL DATA ROOM MERRILLCORP.COM 3
INTRODUCTION
For nearly 50 years, Merrill Corporation has provided forward-thinking information
management services that helps companies of all sizes around the globe plan,
prepare and execute successful corporate transactions, including MA and IPO.
As a recognized innovation leader, Merrill was one of the first to see the incredible
potential of a virtual data room (VDR) solution. Through our market-leading VDR,
Merrill DataSite, launched back in 2004, we’ve guided more than 35,000 successful
MA transactions.
This white paper offers lessons, insight and best practices that Merrill has gleaned
through our extensive and unmatched experience in deploying and supporting
enterprise VDRs.
EMERGENCE OF DIGITAL BUSINESS DRIVING THE
GLOBAL MARKETPLACE
Today, hyper-connected ecosystems and fields of newly available data is
dramatically changing the investment landscape. Modern enterprises can easily
shop the global marketplace as they consider opportunities ranging from
mergers and acquisitions (MA) to fundraising and IPOs. Among the underlying
technologies that provide the framework for this global marketplace, the virtual
data room (VDR) has emerged as a global standard for secure data storage and
seamless sharing during the due diligence phase of a transaction, accelerating
transactions and mitigating risk for all involved parties. Enterprises in developing
markets must work to understand VDR best practices and implement a robust
VDR solution in order to mitigate risk, capture opportunities and remain
competitive in global digital marketplace.
Powerful benefits have led to rapid, global VDR adoption
The first VDRs hit the market more than a decade ago, but it has only been in the
last few years that VDRs have been globally adopted, thanks to their increasingly
advanced functionality. More companies are recognising the powerful VDR
benefits, from making internal data preparation more efficient, to expediting due
diligence and pushing transactions toward faster, better outcomes — all while
delivering a high level of data security and risk mitigation. A recent report showed
global VDR use growing rapidly at an average of 17 percent annually1
.
Developing APAC markets falling behind digital standards
The APAC region continues to see the fastest growth in VDR adoption, showing
more than 20 percent CAGR from 2010 to 20182
. However, these figures are
skewed by Hong Kong, Singapore and other economic centers within the region
where the financial sector has driven advanced VDR use for several years now. In
the many slow-growth market segments outside these economic hubs, VDR
use lags far behind global standards.
Companies in these slow-growth regions risk
dropping out of the global marketplace if they
cannot adapt to its evolving digital standards.
HONG KONG COMPANY
FORCED TO MAKE HK$1.03
BILLION BUY-BACK OVER
IPO PROSPECTUS ERRORS
In June 2012, Hontex
International Holdings
Company Limited was
forced to issue a HK$1.03
billion buy-back offer to its
investors after the company
provided “materially false
and misleading information”
in its IPO prospectus.
The order by the Hong
Kong Securities Futures
Commission (SFC) was the
first of its kind, and continues
to send a clear message:
Companies preparing for an
IPO must pay extremely close
attention to their disclosures
and financial information —
or bear the immediate and
severe consequences.

4. MANAGING RISK WITH THE VIRTUAL DATA ROOM MERRILLCORP.COM 4
THE RISKS OF FAILING TO ADOPT VDR TECHNOLOGY
The VDR has become pivotal technology for companies in slow-growth markets.
Failing to implement and properly leverage a VDR puts any company at an
insurmountable disadvantage in the evolving global marketplace, significantly
limiting transaction outcome
Underestimating the importance of an effective due diligence process
According to the Bain report, several sub-markets in the APAC region are now net
capital exporters. In China, outbound deals have been rising 22 percent annually
since 20093
.
Many Chinese acquirers are new to the MA
game, and fail to see the importance of the due
diligence process. Shortcutting the due diligence
phase — including failing to adopt a robust
VDR to enable critical document-sharing —
increases the risk of poor outcomes for both
buyers and sellers.
Without consistently effective due diligence, companies in the APAC region cannot
compete with highly developed Western markets.
Exposing sensitive and valuable corporate data
Without the sophisticated, enterprise-grade security features of a VDR — including
end-to-end encryption, two-factor authentication and a single chain of data
custody — a company’s most valuable information is alarmingly vulnerable.
Whether from physical theft or digital breach, sensitive information can easily end
up in the wrong hands. Lack of comprehensive backup exposes critical data to the
risk of complete loss in the event of a digital or physical disaster.
Inability to meet international compliance requirements
As corporate transactions shift to the digital, global marketplace, companies
must comply with a much wider range of compliance standards.
Without the auditing, reporting and other
visibility features of a VDR, a company will find
it increasingly difficult to meet escalating
compliance requirements.
Inability to achieve international compliance will effectively remove an company
from the global marketplace.
MASSIVE AMOUNT OF
SENSITIVE FINANCIAL
DOCUMENTS STOLEN
FROM CHINA FIRM
In 2015, China Animal
Healthcare lost five years’
worth of corporate financial
documents when a truck
transporting documents to
a storage facility was stolen.
A VDR would have stored
these documents in a highly
secure digital repository.
Instead, the company faced
the high costs of recreating
years of documentation,
and the risk of exposing
this sensitive information to
malicious actors.
NEW LAWS TIGHTEN
CORPORATE DATA
SECURITY THROUGHOUT
APAC REGION
Several APAC governments
passed laws in recent
years tightening digital
security regulations for
corporate transactions. From
amendments to Singapore’s
MAS Technology Risk
Management Guidelines to
last year’s Cybersecurity Law
of the People’s Republic of
China, stricter requirements
mean that APAC companies
face closer scrutiny of their
transactions and a higher risk
of fines, sanctions and other
penalties for non compliance.

5. MANAGING RISK WITH THE VIRTUAL DATA ROOM MERRILLCORP.COM 5
High risk of materials disclosure litigation
The risk of corporate litigation continues to grow annually, with regulatory agencies
around the globe paying special attention to materials disclosure claims in
corporate MA transactions. Without the comprehensive user-activity visibility and
auditing capabilities of a VDR, a company remains dangerously exposed to this
growing risk. Using a physical document room or a basic generic document
storage product, the company cannot confirm with absolute certainty which
documents were made available to a reviewer. Furthermore, the company cannot
confirm which documents were actually viewed by each reviewer.
VDR technology allows the enterprise to respond
to materials disclosure claims with verifiable
evidence of exactly which documents were
reviewed, by which reviewer, at what date and
time — down to the specific page numbers and
even how long the pages were viewed.
Hidden costs of traditional approaches
Companies considering the cost of a VDR often fail to account for the many
hidden costs of traditional approaches such as a physical document room.
These antiquated approaches make document collection, organisation and
review a tedious and time-consuming process that strains internal resources
and adds tangible cost. Implementing a physical room includes the cost of
the physical space itself, hiring security, and engaging compliance and legal
consultants to mitigate risk.
These costs may not be hidden, but they are
ongoing and quickly add up as the other
shortcomings of the physical room prolong the
transaction lifecycle.
Moreover, the physical room requires that internal personnel and third-party
consultants travel to — and remain at — the site. This amplifies these ongoing
costs and significantly increases the overall cost to the company.
COMPANY FACES
HIGH LEGAL COSTS AND
DAMAGED REPUTATION
AFTER MATERIALS
DISCLOSURE CLAIM
After closing a high-value
MA deal joining two well-
known global companies,
the buyer claimed the seller
failed to disclose crucial
financial data during the
due diligence process. A
VDR would have provided
a complete record of all
disclosed information and
a comprehensive audit trail,
allowing the buyer to prove
it had not seen the data in
question and that the seller
entirely withheld crucial data.
Because the transaction used
a paper-based data room,
the buyer had no definitive
record of information viewed
during due diligence. Thus,
the buyer’s damages claim
ultimately failed, leaving
the company with immense
legal costs and irreparable
damage to its reputation.

6. MANAGING RISK WITH THE VIRTUAL DATA ROOM MERRILLCORP.COM 6
VDR BEST PRACTICES FROM ESTABLISHED MARKETS
Enterprises in emerging markets should look first to the proven successes and best
practices of the U.S. and European markets, where the VDR is firmly established
and driving tangible benefits across thousands of corporate transactions annually.
• Choose an enterprise VDR — not a generic storage application: An
enterprise VDR provides functionality, scalability and security that is designed
specifically for enterprise-grade use cases.
• Complete data security requires a single chain of custody: An enterprise
VDR that maintains end-to-end control over customer data provides the
highest level of security and ensures compliance with international
regulations.
• Early engagement delivers additional efficiencies and cost savings:
Deploying a VDR in the pre-transaction stage speeds up workflows,
reduces costs and enables a company to respond to market opportunities
more quickly.
• Integrated dual-track capability provides crucial agility: Choosing a VDR
solution that enables dual-track preparation for both an MA and IPO
enables a company to capture its best opportunity.
• Complete visibility reveals best prospects, mitigates risk: A comprehensive
audit trail provides insight into most-interested potential buyers, while
protecting a company against materials disclosure litigation.
• Connect the VDR to a full range of information management services:
Choosing a VDR solution that seamlessly connects data to a complete
portfolio of information management services delivers ongoing efficiencies
and cost savings for the enterprise.
LEVERAGING A PROVEN VDR SOLUTION TO DRIVE FASTER, BETTER
TRANSACTION OUTCOMES
As MA and IPO transaction volume increases in
emerging markets, both the complexity and risk
involved grows, as well.
To capture opportunities in the global marketplace, enterprises in emerging
markets must look to an established VDR solution such as Merrill DataSite,
offering proven success in streamlining due diligence processes and enhancing
transaction outcomes.
Partnering with an experienced VDR solution provider ensures a smooth VDR
deployment and ongoing operations, based on established best practices
from successful VDR-driven transactions. Armed with the efficiency, agility,
security and visibility of a VDR, the enterprise can mitigate the risks including
data breach and litigation, ensure international compliance, and reduce overall
costs — all while driving a transaction to a faster, better outcome. These
benefits are more than a competitive advantage; they’re critical to compete on
the global stage.
CHINA SECURITIES
REGULATORY COMMISSION
DELISTING COMPANIES
FOR DISCLOSURE ERRORS
The CRSC’s delisting of
Zhuhai Boyuan Investment
and Dandong Xintai Electric
over financial disclosure
errors are the latest in several
delistings (both forcible
and voluntary) following the
CSRC’s 2014 issuance of more
stringent disclosure rules.
These high-profile delistings
show that the CSRC is
paying close attention to
information posted during
the due diligence phase of
MA and IPO transactions.
A VDR provides a powerful
due diligence platform that
can help US-listed Chinese
companies and A-share stock
market-listed firms simplify
disclosure preparation and
ensure compliance with these
complex standards.

7. MANAGING RISK WITH THE VIRTUAL DATA ROOM MERRILLCORP.COM 7
THE MERRILL DATASITE DIFFERENCE
Merrill DataSite supports thousands of MA and IPO transactions annually.
Our forward-thinking technology creates a single,
secure repository for corporate documentation.
DataSite enables efficient collaboration during pre-market data collection and
review, and provides potential buyers and other interested parties with seamless
access during due diligence. Merrill protects corporate data with the highest
level of enterprise security, including end-to-end encryption and a single chain
of data custody, as well as enabling in-house hosting and management.
Merrill supports our innovative VDR technology with unparalleled expertise and
support. Our dedicated project managers provide 24/7 support through the
entire transaction.
Project managers are fluent in 14 languages — including English, Mandarin,
Korean and Japanese — help organisations navigate international transactions.
Merrill keeps your data near to you with our data center hosted in Hong Kong,
and resilience in the UK and US. Local hosting means better, faster performance,
allowing you to build and administer your VDR more efficiently.
1
http://www.strategyr.com/Virtual_Data_Rooms_VDR_Market_Report.asp
2
http://www.strategyr.com/Virtual_Data_Rooms_VDR_Market_Report.asp
3
http://www.bain.com/Images/BAIN_BRIEF_China_Outbound_M%26A.pdf
BENEFITS OF
MERRILL DATASITE VDR
MARKET-LEADING
SECURITY
IN-HOUSE HOSTING
AND MANAGEMENT
BEST-IN-CLASS
SUPPORT
24/7/365 CUSTOMER
SUPPORT
NEW ASIAN DATA
CENTRE
14 LANGUAGES
SPOKEN BY PROJECT
MANAGERS, INCLUDING
MANDARIN, JAPANESE
AND KOREAN

8. ABOUT MERRILL CORPORATION
Merrill Corporation provides technology-enabled platforms for content sharing,
regulated communications and compliance services. Merrill clients trust our
innovative cloud-based applications and deep subject expertise to successfully
navigate the secure sharing of their most sensitive content, perfect and distribute
critical financial and regulatory disclosures, and create customised communications
across stakeholders. With more than 3,800 people in 41 locations worldwide,
Merrill clients turn to us when their need to manage complex content intersects
with the need to collaborate securely around the globe.
Merrill Corporation secures solutions at every phase, so you can
secure ongoing impact and growth.
To discuss how Merrill Corporation can help you manage and
share content securely online, please contact us.
phone +852 2536 2288 / +44 (0)20 3031 6300
email info@merrillcorp.com
web merrillcorp.com
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