Simplifying Due Diligence with the Help of Virtual Data Rooms

by Jan Hoffmeister, Managing Partner DRS,
published in commerce germany magazin, 2nd edition 2009

Carrying out a due diligence is a core part of every acquisition deal. No matter whether it is the sale of a portfolio or an M&A deal, the prospective acquisition has to be very closely scrutinized.

This means that all transaction-relevant data, which often comprise thousands of documents, have to be accessible. In the past, potential buyers (bidders) had to use physical data rooms. There, they sifted slowly through all the binders one by one; it was a process that lasted days, sometimes weeks. The time and expense involved was enormous. With the creation of the virtual data room - a web-based platform that allows for secure online access to confidential documents - this process could be speeded up demonstrably. Bidders now can simultaneously review documents without ever learning their competitors' names. As Jan Hoffmeister, Managing Partner of Data Room Services, the leading provider of virtual data rooms, explains: "Due to the fact that documents are digitalized, the experts have access to all the confidential information they need anywhere and any time." He adds: "This allows the experts to focus exclusively on the transaction at hand!"

And too, detailed reports tracking user activity in the virtual data room provide a previously unknown level of transparency. The sell side can see exactly which documents were viewed, thereby giving them an idea about what the bidders consider to be of importance. Such knowledge can provide a huge advantage in preparing for the ensuing purchase contract negotiations. Data Room Services is a pioneer in the development of innovative solutions to facilitate the transaction process. With the help of the integrated Q&A management platform, the entire question and answer phase of the transaction can be organized and handled virtually. The fact that the data is stored centrally in a highly secure database allows all the information exchanged during or after contract negotiations to be accurately tracked.

"It's fascinating the way virtual data rooms can be used and what their future potential is." says Jan Hoffmeister, adding: "Every company - no matter how large or how small - can quickly, simply, and securely manage their confidential documents and make them available to third parties. By doing so, companies can save a great deal of time and money as well as bring more transparency to their own procedures."