Virtual Data Room Blog

Can A Virtual Data Room Help Optimize The Value Of A Transaction?

Jan 3, 2013 11:57:00 AM / by Harsh Batra

Virtual Data Room maximises a Deal ValueIn a number of previous posts, we have discussed how Virtual Data Rooms have become prevalent in most transactions and the multiple benefits of using datarooms instead of physical ones.  For experienced dataroom users the benefits go beyond security, organization, speed to set up a transaction. Many of our clients tell us that they use datarooms to actually improve the resut of the transaction, managing timing of a deal, understanding bidder interest and eventually improving the deal value.  These are three of the ways this can be acheieved:

1) Increased Exposure

A virtual data room gives you increased exposure to bidders in a number of ways, which means increased likelihood of closing the deal:

  • Multiple bidders and investors can be involved – sometimes simultaneously – without “tripping over” each other as they would in a physical venue. In fact, you can set your security controls so that they don’t even know who else is in the virtual data room at the same time as they are, because documents can be viewed by several parties at a time.
  • Access to data reaches far beyond country borders, eliminating the expense and inconvenience of travel and the need to copy and distribute sensitive information.
  • Any number of additional bidders can be added with zero incremental costs.

All this means your deal isn’t limited by complex access issues, and you can open the floor to as many potential partners as you need to.

2) Assessing Buyer Interest Level

The virtual data room reporting options enable you to assess the level of interest among your bidders. This helps you to understand the reasoning behind certain requests, and to identify the right people to target for relationship building. It could even affect the final price by equipping you with “inside” knowledge during your negotiations.

The reporting options provide real-time information on user logins; you can see at a glance which bidders are spending time in the room, what documents they are viewing and for what length of time – and of course, who hasn’t bothered to login at all.

The detail in the reports also helps you to assess the bidders’ levels of interest by showing which users are accessing the documents. You can determine whether they are senior executives who could influence the bid, or simply by admin staff gathering intelligence for reports.

3) Customisation of Access Rights

The ability to customise access to your data allows you to protect your interests by revealing information as and when you are ready to do so.

For example:

  • You can choose to make specific sections available only to bidders who have shown a certain level of interest.
  • When negotiations with front-runners are at a more advanced stage, you might need to provide access to additional data only to those bidders.
  • You can protect information critical to your business from abuse by parties claiming to be bidders in order to gain access to the data, or who are unsuccessful in the outcome of the deal.  

The customisation options in a virtual data room make it possible to grant access to selected bidders, for a limited time only, with specific rights such as reading only to avoid downloading, printing or copying. This is essential in situations where a merger or acquisition is hostile, or where the major players are competitors or suppliers.

These are some of the examples of how and experienced dataroom user can employ the functionality of a dataroom to drive up the value of a transaction.  We would always recommend to ask your professional data room deal coordinator for tips and advice. 

 

                                                         

Topics: Dataroom tips, Data Room, dataroom