Virtual data rooms have become the norm in most corporate transaction (M&A, fund raising, asset sales). Corporate finance experts now widely acknowledge the benefits offered by VDRs in terms of security and convenience.

Users with more experience of working with professional data room providers are now benefiting from an additional advantage of the service, the possibility of transforming the data from tracking user activity into deal intelligence that can improve a transaction.

To tap into the full benefits of deal intelligence provided by a data room, you need to know what’s available, how it works and what it can do for you throughout the process of the deal.

Deal Intelligence

Knowledge of the advantages of the deal intelligence offered by data rooms is often limited and many of the more advanced features go unused. World-leading research and advisory firm the Gartner Group defines intelligence as “a term that includes the infrastructure and tools that enable access to and analysis of information to improve and optimize decisions and performance.” A data room does just that for a corporate deal, in the following ways:

  • Assessment of the interest levels of potential buyers based on reports
  • Assuring compliance with best practices and legal requirements for access.

Let’s consider these one by one.

1) Assessing Buyer Interest Levels

The Data room tracking and reporting functions offer a host of ways for you to monitor the levels of interest among potential buyers. These include:

  • Login reports – Reviewing the list of users who logged into the data room on any given date (and those who haven’t) gives you a good idea of their levels of interest. You can check the number of times users have logged in and compare this with the alerts sent out when new documents were uploaded. This will tell you which users were prompted to log in by each alert, giving you detailed intelligence on what party is interested in the various aspects of the deal.
  • Document reviews – Understanding who is viewing which document in the data room plays an important role clueing you in to the potential buyers’ interest levels. Based on the user profiles it’s possible to tell who is reviewing each individual document. For example: new financial documents are uploaded: 

Within 24 hours, several users log in and view them, download them and print excerpts if they have printing rights. After a brief look, junior staff sign out and shortly after, senior users log in and spend several hours reviewing various documents.
This tells you that the management team at this particular company finds the new information interesting, as opposed to another prospective buyer who either didn’t bother to log in or who spend five minutes taking a look.

Based on this analysis of the interest levels displayed, you can decide whether to open up additional information to the bidding teams. If several prospective buyers show interest in a now-defunct division that was promising a few years ago, you might want to add that as an option to sweeten the deal.

2) Compliance and Audit Trail

In these days of litigation over everything, breaking the so-called “chain of evidence” can result in costly lawsuits, so protecting your company from mistakes that can generate disputes is important. Virtual data rooms offer real deal intelligence in the form of a comprehensive audit trail generated in a controlled environment. They do this by providing reports showing who accessed certain documents, the date on which they viewed them and whether or not they were downloaded, copied, printed or shared with others. In many jurisdictions, this can act as vital evidence in the event of a legal dispute.

It’s also critical to have a traceable record of all interactions relating to documents, because in the event of a dispute either party may be required to provide evidence of questions asked and answers given. A comprehensive Q&A module is easy to download as a user-friendly report, which can be retained for record-keeping purposes to comply with the legal requirements of the deal.

There is a increasing number of Data Room service providers options in the market, so make sure that you select the right service provider by focusing your comparison on the 5 key elements as discussed in one of our earlier post –  5 Factors to Compare Virtual Data Room Providers . Make the most of your virtual data room experience by familiarising yourself with features offered by your service provider and the benefits of using them to their fullest potential.

 

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