Dataroom Blog

The effect of the big economic downturn that we have experienced in the last few years is now being reflected in an increased number of lawsuits and litigation processes related to many M&A transactions.  For example, according to a Reuters article, the number of M&A related court cases in the UK has multiplied X 6 in the last year.   This only includes the number of cases that are actually taken to court, many are settled before that.

Sellers are suing buyers, buyers are suing sellers, investors are suing shareholders and management..

We believe that the main driver by this increase is that when things are tough, mistakes and disagreements gro stronger.  As Warren Buffet puts it, when the tide goes down, you discover who has been swimming naked.  However, from our experience, we also believe that a good dataroom can help sellers, buyers and investors to significant reduce the risk and cost of M&A litigation.

Different aspects of a dataroom can reduce the risk and impact of M&A litigation:

1. Document organization. Anyone that has been involved in a M&A dispute will testify of the importance of a clear document structure with a solid numbering system.  We strongly believe that the best way to organize a data room is by keeping the folder and subfolder structure that we are all so used to.
2. Accountability. A good virtual data room can certify that the documents shared with investors have not be changed and that they have been available during a period of time.  Moreover, some of the best datarooms offer auditing and reporting capabilities that provide detailed information and audit trail about all the documents and users in a virtual data room.
3. Data Room as eBible. Historically, when a transaction closes, the participants receive a data room CD/DVD with all the documentation related to the deal including audits and reports.  Although DVDs are useful,  an online Deal Bible solution is much more effective as it provides assurances that the data has not been changed and cannot be lost.

Very educative perspective from  Law.com describing what a dataroom is and covering the main service and platform functionalities that a Virtual Data Room provider should give its M&A client (article).

One of the areas that we as a Company differentiates us from many of our competitors is our approach to service.  This paragraph from the article is particularly interesting to us:

Regardless of whether you choose a technology solution with the expanded features of a virtual deal room or the more traditional virtual data room format, it is essential to determine whether a provider has an accessible and knowledgeable technology support and services team. The role of the support team is not only to help you expeditiously implement the VDR technology for your firm, but also to help you apply it to your deals and transactions to yield more efficiency for all involved parties.

Most providers should be able to set up VDRs within 24-48 hours, and many can do same-day setup. Others allow you to initiate your own deal room whenever you need one simply by selecting “New Deal” on the VDR menu. To ensure ease of use and convenience, you should determine whether your VDR solution has any software downloads or system requirements. Ideally, the VDR should place as few demands as possible on users. Confirm the availability of technical support to help administrators and users should they encounter any questions or problems to troubleshoot.

The VDR support team needs to be knowledgeable not only about the technology they provide, but also should have familiarity with corporate transactions and the responsibilities of the respective deal team members. This expertise ensures that the provider can tailor the technology specifically to your needs. Furthermore, the VDR provider must be able to handle the support needs of the other deal team members when needed, and interact professionally with all deal participants.