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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.

Some might feel that thumbing through sheets of paper, no matter how well filed, in order to locate those important documents pertaining to an M&A deal is a scene that doesn't belong to this century. However, some who have been involved in mergers & acquisition activity for a long time simply stick to the process they are familiar with and might even be a tad technophobic. Those at the cutting edge of technology that aids the process are convinced that Virtual Data Rooms are the way forward. Saving time, money and, albeit to a much lesser extent, the planet is surely of interest to anyone. In that respect, using Virtual Datarooms as opposed to traditional document folders will have an obvious attraction to those in the M&A fraternity. Speed Tankut Eker Director of Business Development for TransPerfect Deal Interactive, whose VDRs offer super fast load times and a 24 hour service team, explained: "Virtual Datarooms can reduce the amount of effort and resources spent on traditional paper exchanges, shipping costs, and time lags associated with outdated paper data rooms. VDRs not only eliminate the need for hard copies, but also the time and resources spent managing documents, and providing secure settings for the due diligence process. "VDRs are a collaborative solution that can accelerate and simplify the M&A process by securely hosting

ACQ September 2011

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 "Even a well-organized paper dataroom can become inefficient and information outdated. With multiple buyer agents combing through binders and folders, over time documents get misplaced, disorganized or worse, removed intentionally or unintentionally by a buyer." "Because of these issues traditional datarooms can create longer review times and complaints from buyers of not having access to necessary information. And, if a company completes a fiscal quarter during the review process buyers need to be updated, which may require a return visit to the dataroom if the information is too sensitive to be distributed by email or mail." Security "Despite best efforts and security, confidential information can be misplaced or removed from a physical dataroom"Philip continued."With a VDR, access , controls restrict who can see what documents and when. Advanced security features ensure no unauthorized printing, copying or downloading of documents. And auditing trails track which documents have been reviewed by whom, virtually eliminating untraceable information leaks; reducing instances of compliance risk; and protecting tens of millions of dollars in value during negotiations. Syndicus Solutions are committed to offering user-friendly solutions for capturing, managing and protecting data that can save time and money. Director Michael Reddy said: "The system is extremely secure you have full control over who can access the dataroom



Virtual Datarooms

and which documents they can see. If a particular user is not meant to see a document, he/she will not know it exists." Joel Lessem, CEO of award-winning deal room provider Firmex said: "At a high level dealmakers should not be sharing large volumes via email, thumb drives, FTP, CD or courier. It's too insecure and inefficient. Nor should they be using freemium services (Dropbox, Google Docs) that don't comply with the highest level of security audits and compliance. It's simply not worth having a breach of confidential information." Organisation "Deal rooms are used for a buyer or buyers to perform their due diligence on a pending large transaction," Joel continued. "The goal of Due Diligence is to identify any problems that may be material to the business. When the information is not readily available or well organized, buyer uncertainty can develop. "Deal rooms help accelerate deals to close. Because it is online, due diligence can now be done simultaneously by different buyers. This can significantly shorten the diligence timelines as multiple buyers can review documentation without knowledge of other bidders simultaneously rather than sequentially." "Law firms, investment banks and corporate deal makers are, increasingly, licensing unlimited use data rooms as part of their infrastructure so they can get clients organized from the start of the mandate through to the closing of the deal, rather than waiting for the last minute to get a data room." Due diligence is certainly a key theme here and as a vital and lengthy part of M&A, many will no doubt appreciate the ability to cut time without compromising the process in any way. "A virtual dataroom can greatly improve the efficiency of the due diligence process, speeding up the time spent to manage the transaction as well as providing greater control over the disclosure process," said Michael Reddy, listing several points: "The record of documents placed within the dataroom can be made to accord precisely with the document list comprised in the draft Disclosure letter; you can be absolutely sure that all visitors to the dataroom are seeing the same set of documents, minimising duplication and access to superseded documents; multiple buyers accessing the system will be totally unaware of each

other; the dataroom is available 24/7 from anywhere in the world, with multiple individuals accessing the system concurrently; full electronic audit trail supports effective management of the process." All companies agree that language is not a barrier when it comes to VDRs as Tankut Eker pointed out: "With the growing presence of cross-border M&A activity, VDR providers have become aware of the need for multilingual reconciliation and have made a good number of steps technologically to address this need. For instance, our platform, Deal Interactive, provides a multilingual platform that is localizable in more than twenty languages so that users can long into the deal room in the language of their choice." Reducing costs "The hard costs, related to real-estate, people resources, travel costs and logistics to set up and manage the physical process are easily calculated, although they vary greatly for each transaction," Joel explained. "And, there are further cost savings that can be realized by working with the right VDR partner. A subscription model that encompasses the unlimited deals, pages, training and support creates cost certainty." "The market is growing, maturing and becoming much more affordable to use on a continuous basis for financial transactions and related diligence processes. Many corporations are adopting VDRs on a subscription basis because they are regularly engaged in financial transactions and share large volumes of documents with 3rd parties. Intermediaries are also subscribing on a continuous basis. I predict, for any organization engaged in financial transactions to 'not have a permanent and unlimited use VDR' facility in the future, they could find themselves at a competitive disadvantage." Philip Whitchelo concluded: "Rather than maintaining a paper dataroom for several months so that teams have sufficient time to review an assortment of information, a VDR allows prospects to access documents simultaneously through a standard web browser. The result is often shortened timeframes by as much as 50 percent. Updated or supplemental information is simply posted to the VDR and buyers are notified electronically—a process that takes minutes. And, most best-in-class VDR providers can have a VDR up and running in less than 30 minutes and offer scanning services to put physical documents online."

ACQ September 2011



Virtual Datarooms

Founded: 1996

Founded: 2006

• Virtual Data Room history: In 2002 created the world's first

• Virtual Data Room history: Since 2006 Firmex has been licensing

virtual data room to support the M&A due diligence process. • Usage: Its roots are in financial services especially M&A, Debt Capital Markets and Alternative Investments but its platform hasalso extended to multiple corporate use cases. • VDR clients: Trusted by over 1 million individuals and counts over 800 of the Fortune 1000 as users including the top 50 financial services companies and top 25 law firms in the world. • Security: SAS 70 Type II certified and successfully undergone more than 100 security audits by customers and independent auditors. Highest level of encryption applied and advanced security features ensure no unauthorized printing, copying or downloading of documents. • Speed: Can have a VDR up and running in less than 30 minutes and offer scanning services to put physical documents online. • Quote: : "IntraLinks is a global Software-as-a-Service provider and has become a standard by which companies collaborate, manage and exchange their critical information in a secure, auditable and compliant manner."

online virtual data rooms for corporate transactions, governance and compliance matters. • Usage: In addition to financial transactions their software is also used for an array of diligence and compliance related processes such as financial audits and document-based reporting for compliance purposes. • VDR clients: Investment banking, Legal, Private equity, Life Sciences, Real-Estate and Resources. • Security: SAS 70 Type II compliant data center facility hosted by SunGard, the same company that serves the world's 25 largest financial services firms. • Speed: Complex new projects can be set up in minutes - pick a template, upload documents, select your users, and get to work. • Quote: "In a nutshell, we are intuitive, affordable, and deliver deal specific expertise."

INTRALINKS 44 Featherstone Street London, EC1Y 8RN T: +44 (0)20 7549 5200 F: +44 (0)20 7549 5201 E: W: Philip Whitchelo

ACQ September 2011

Firmex 110 Spadina Avenue Suite 700, Toronto, Ontario M5V 2K4 Canada T: 44(0) 20 3371 8476 (EU) 1.888.688.4042 (NA) E: W:

Joel Lessem



Virtual Datarooms

Founded: 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 • Usage: Stand-alone web based solutions for legal and financial firms, with audit, back up and other support options. • VDR clients: Law firms, investment firms, oil and gas, mineral exploration and property management firms • Security: Full permission based system giving clients total control over access and usage. • Speed: Guaranteed fast delivery, with scanning and support, if required • Quote: "Our experience in financial markets, legal services and regulation enables us to match our clients' needs quickly and effectively" Syndicus Solutions Limited Rotherfield House 7 Fair Mile Henley-on Thames RG92JR T: 0118 375 0465 E: W:

Datarooms over a five year period.

• Usage: From scanning hardcopies in our world-class document management facilities to setting up user and admin roles based on clients'specifications, around the clock. • VDR clients: M&A, legal, financial services • Security: TransPerfect Deal Interactive's VDR hosting environment is SAS 70 Level II certified.This is the gold standard for safeguarding electronic data in the financial services industry. • Speed: The fastest load times in the industry and a service team that works around the clock. • Quote: "Not only does Deal Interactive provide intuitive, web-based document repositories, but it can also insure that all aspects of multilingual transaction support is comprehensive, accurate, and effective" TransPerfect Deal Interactive 120 Fenchurch Street 3rd Floor London EC3M 5BA T: 0044 (0) 207 398 8200 F: 0044 (0) 207 398 8202 E: W:

Michael Reddy

Tankut Eker

ACQ September 2011

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Firmex - ACQ  
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A look at virtual data rooms with Firmex by ACQ