Competitive Sale Process

During the planning stage, the seller identified documentation to release to potential buyers, and the sequence and timing of the release. To kick-start the process, interested parties are granted access to these documents and the vendor’s management team opens the data rooms for them. Throughout this period, the seller can obtain deal intelligence from the VDR’s auditing and reporting tools. This helps you to ascertain who is looking at what documents to gauge their levels of interest.

Competitive Sale Process

Competitive Sale processes typically require more preparation than One on one deals. This is due to the fact that a Competitive sale process of a M&A requires access for multiple buyers as opposed to a single buyer / single seller situation. The more potential buyers there are, the higher the security and confidentiality requirements must necessarily be.  

Virtual Data Rooms play a key role in each phase of a M&A cycle starting from the Preparatory Phase to a successful post deal closure phase. In a series of blogs to follow, we'll cover all the different stages of a M&A Cycle individually to understand how Data Rooms can streamline the Due Diligence process. Not all deals work out, however, and Forbes magazine reports an overall success rate of around 50%, mainly because the companies acquired looked better on paper than they actually were. This makes the case for stronger due diligence, which is only possible if the full M&A life cycle is properly handled. 

The wide adoption of Virtual Data Rooms has been fundamental in the reduction of deal leaks, the two words that can spell disaster for a high value deals. The ability to track every user’s movements within the dataroom, remotely block access to users and call on this information at a later date has all contributed to more secure deals.
Whether it’s careless employees, malicious competitors or hackers you are protecting information from, there are steps that are increasingly being taken in the industry to prevent leakages and we will guide you through these below.

How do Deals Leak?

Deliberate Leaks -

There are two angles to a (deliberate) deal leak –  One from the sell side one from the buy side :

• Sell Side leaks - By leaking deals, the sellers attempts to increase the price as it would attract more interested parties who might also like to bid. The rival bids may then push the original bidder to increase their offer.
• Buy Side leaks are more of an exit strategy from a potential bid. During the due dilligence process, the buyer may run into issues and decide to move out of the process without running into any legal or regulatory hurdles. Some do this by leaking the deal which in turn results to a delay in completion time. This makes the sellers look for alternate bidders and the buyer now has an easy exit without having to pay the price of breaking the deal agreement because the deal is broken by the seller and not the buyer.

Sometimes deals are deliberately leaked to expedite the process. A buyer might leak a deal and put pressure on the seller when he sees delays from the sell side and a seller might leak the deal to force the interest level out of the buyer.
Then there is deliberate leak for personal gains by way of insider trading etc.

Inadvertent Leaks –

“Humans are the weakest link in Security Chain "…Does this phrase ring a bell? If it does, you know exactly what we are trying to explain here. People are often ignorant of the consequences of being careless with information. By way of socialising, people sometimes let slip that critical information without even realizing it. Deal teams these days have a number of individuals working on specific areas in the DD process. With so many individuals being a part of the transaction, the risk of accidental leaks is much higher. 

We have taken a break from giving tips on good Virtual Data Room practice and document security to share some exciting news.  SunGard Availability Services, the global leading security infrastructure provider, has selected EthosData as the subject of a case study that discusses our new infrastructure, service and level of security.

Acquisition International recently asked us to provide the perspective of a dataroom provider about the factors that contribute to a succesful M&A transaction and integration.

As a leading Virtual data room service provider, we know how to protect your confidential information. Some use a virtual data room only for specific high profile transactions like an M&A/IPO or Fund Raising etc., while others use a Virtual Data Room extensively for managing all their internal documents. What companies have realised is that although their documents are completely secured with Virtual Data Room,  they have little to no control over the documents which are still stored in emails, networks, drives and desktops. In the past few years a number of our clients have asked us to share our best practices regarding document handling to implement inside their companies. Upon request, here are some ways in which a document retention a disposal policy will ensure the integrity of the data in your possession

Physical data rooms are quickly being replaced by virtual data rooms, partly because of the complex procedures that are necessary to protect the information held in these rooms. Having confidential deal information in a specific location means that the parties in a deal need to travel to and from the location each time they view documents, which also results in high costs associated with transport, accommodation, premises and security. Another complex issue is the on-site management of the venue, which needs to be restricted to only those who are essential to the due diligence process. Use of Virtual Data Rooms has considerably evolved over the years over its Physical counterpart in many ways.

Over the past years, the term “cloud computing” has become synonymous with technological advancements like Virtual Data Rooms. It refers to the use of externally-located hardware and software to store information and do the work that needs to be done, and generates exciting possibilities for anyone who needs managed computing resources. Cloud has also generated its share of suspicion from sceptics, and security is particularly closely scrutinised. Here’s how the cloud came about and how it works:

Data stored on secure IT platforms such as data rooms is sensitive, and if the wrong people access it there could be significant consequences for your company. The weakest link in the IT security chain is the human element. No matter how secure and robust your security protocols are, there always exists a genuine gap that can be breached. "Trust" and "ignorance" are the two most common human behaviours that add to this gap. People are either too trusting of others (or) they are ignorant of the consequences being careless with information. Those who wish to will do just about anything to gain access to confidential information and mostly rely on people's inability to keep up with a culture that heavily relies on information. In this post we will have a look at the various social engineering tactics that take adantage of the human behaviour and how we can effecively have a control over it .