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Virtual Data Rooms For Mergers And Acquisitions

Virtual Data Rooms – Meaning and How It Works? A data room is a place where we store data. Back in the day, we only had physical data rooms. However, things seem to have changed now as virtual data rooms appear to be taking over the world.

Virtual Data Rooms

In this article, we’ll talk about virtual data rooms and how they impact mergers and acquisitions.

Let’s get started.

What Are Virtual Data Rooms?

A virtual data room, as the name suggests, is an online repository that’s known to be secure and easy to manage. It’s used to store and distribute a variety of files and is generally utilized to share, disclose, and review company documentation.

Virtual data rooms are gradually replacing physical data rooms as they offer more ease and security. Globalization has also played a major role in the success of virtual data rooms.

They are more affordable and easily available, hence companies prefer to use virtual data rooms instead of physical data rooms.

 

Virtual Data Rooms For Mergers And Acquisitions
Virtual Data Rooms For Mergers And Acquisitions. Photo Source.

 

Why Are Virtual Data Rooms So Important When It Comes to Mergers and Acquisitions?

Most companies have already gone virtual but some businesses still prefer the traditional way of doing business. If you haven’t turned to virtual data rooms, then consider doing so today, especially if you’re looking at mergers and acquisitions.

 

Role of Virtual Data Rooms For Mergers And Acquisitions

Here are some of the reasons why:

Security Is The Number One Concern

M&A documents typically contain private information, hence it’s important to ensure they don’t reach unsafe hands.

Physical files can be easily stolen or destroyed hence they’re highly vulnerable. But, such is not the case when it comes to online data rooms as they offer the ability to password protect and encrypt files. Hence, there is no risk of data breaches or unauthorized access.

Plus, reliable data room providers also offer features such as fence view and watermarks. This allows businesses to protect files from spreading or being used illegally.

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IS YOUR BUSINESS DATA SECURE AND FUTURE READY?

 

They Speed Up The Process Without Costing Much

It can be very taxing and time consuming to share all the documents physically. You will have to travel from one corner to another, which adds to the cost and time. 

Virtual data rooms make life easier as all you have to do is upload your documents online and share ’em with others. They will be able to access it 24/7, from anywhere in the world. This removes all the barriers and makes it easy for everyone involved to review the files.

As a result, the entire process of M&A gets completed quickly and easily. The only thing you need to be careful about is the quality of data rooms. They must offer excellent up-time so that you do not have to worry about not being able to access your files when you need to.

 

Offer Better Insights

Most virtual data rooms offer reports that contain valuable information on business activity. This information can be very helpful during mergers and acquisitions. They can help understand how good or poorly a business has been performing and what can be done to turn the tide.

Based on the system that you use, you may have access to AI tools that will make it easier to identify threats and opportunities. You can use this information to protect your business against future dangers and help it grow. 

 

You Get Great Support

This may come as a surprise but using virtual data rooms is easy and simple even if you have no prior experience dealing with online data rooms. This is because most vendors offer support, hence you will always have access to the help that you need.

 

Things Are Better Organized

It can be very frustrating to handle papers. They can make the job irritating as you will have to organize hundreds of documents. Plus, fetching what you need can be troublesome as well. 

Online data rooms make the job easier as they allow you to access the files that you need without having to go through piles of papers.

 

What Should The Virtual Data Room Contain?

It can be hard to explain what virtual data rooms should contain. In simple words, they should contain all the data/information you may need during and after the merger.

Here are some of the documents you’ll need but remember that this is not a complete list:

Corporate Documents

  • Certificate of Incorporation
  • List of ownership percentage
  • Business Licenses and Permits
  • List of qualified jurisdictions
  • List of directors and officers
  • Good standing certificate 
  • Tax certificates

Securities including Capital Stock

  • Shareholder Information including name, issuance date, etc. 
  • Cap Table
  • Voting Agreements
  • Stockholder Agreements
  • Proxies 
  • Stock Certificates
  • Buy-Sell Agreements
  • Tax and Financial Matters
  • Financial Statements (Audited and Unaudited)
  • Yearly, Quarterly, and Monthly Financials
  • Operating Plans 
  • Income Tax Returns
  • Banking Accounts 
  • Loans 
  • Capital Leases
  • Guarantees
  • Security Agreements
  • Inventories
  • Bridge Financings
  • Assets and Property
  • Summary and schedule of all assets 
  • Mortgage documents
  • Patents 
  • Software License Agreements
  • IP litigation summary
  • Service marks
  • Trademarks
  • Registered copyrights
  • Domain names

Material Agreements

  • Material Agreements summary
  • Partnership Agreements
  • Distribution Agreements
  • Leases
  • Employment Agreements
  • Agency agreements
  • Mortgages
  • Prior M&A agreements
  • Privacy Policy
  • Terms of Use Agreement

Sales, Marketing, and Customers

  • List of customers
  • Accounts Receivable 
  • Commission Plan
  • Reseller information
  • Credit policies 
  • Backlog
  • Marketing materials 
  • Product campaign
  • Analyst reports

Manufacturers and Suppliers 

  • List of suppliers 
  • Supplier agreements
  • OEM agreements
  • Manufacturing agreements

Product and Customer Support

  • Satisfaction surveys
  • Sales brochures

 Regulatory Matters

  • Permits
  • Violation notices
  • Government licenses

Litigation and Disputes

  • Litigation complaints
  • Arbitration filings
  • Environmental claims
  • Past settlements

 Insurance

  • Insurance policies
  • Liability policies
  • Insurance claims 

HR and Consultants

  • A list containing information related to employees
  • Organization chart
  • Offer letter 
  • Employment agreements
  • Non-competition agreements
  • 401(k) plan
  • Medical plan
  • Insurance plan
  • Retirement plan
  • Disability plan
  • Childcare plan
  • Vision plan
  • Employee handbook
  • Bonus plans
  • Incentive plans
  • Profit-sharing plan
  • Severance plans

Press 

  • Press releases
  • Analyst reviews
  • Newspaper articles

Now that you know all about virtual data rooms, we hope you will have no difficulty in mergers and acquisitions. Write in the comments if you have any questions regarding M&A and virtual data rooms.  

Have you had any experience with virtual data rooms? What could you advise for those who are just going to try to use them?

 

See Also.

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About Lori Wade

Lori Wade is a content writer for dealroom.net who is interested in a wide range of spheres from business to entrepreneurship and new technologies. If you are interested in M&A or virtual data room industry, you can find her on Twitter & LinkedIn or find her on other social media. Read and take over Lori’s useful insights!

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