Every M&A transaction faces unique challenges, depending on the nature of the transaction itself, participants involved and where they are located, budget, or who has access to what documentation to name just a few. And just as every deal is different, there is a marketplace full of virtual data room providers claiming to make the process easier.
Some companies may have a list of requirements for a data room provider, but for others, it can be difficult to know which vendor offers the type of service that will be required.
In this post, we will guide you through the key areas that should be considered during the process of finding a virtual data room for M&A.
Value
As in many procurement processes, value can often be discarded in favor of cost, but the two are very different when looking at a data room. There are a number of factors that should be considered when evaluating the price you will pay for a data room, including:
- Will you be charged per megabyte or per page? This could make a big difference to the price you’ll pay and depending on the size of your documents or how many visual elements will be included, the price could vary considerably
- What’s included? While one price may be cheaper than another, the items included could be very different. Look at factors such as 24/7 service, any training or one-to-one support, quality of servers, and uptime
- Who will be uploading documentation to the servers? If it’s the vendor then this could affect what you’ll pay
There can be many different elements to a virtual data room so to accurately compare vendors, it’s important to compare what will actually be included when reviewing quotations.
Security
‘Online Security’ has been in the news recently, with numerous tales of hacks and breaches affecting companies of all sizes. When comparing virtual data room providers, security can come in many forms and it’s important to consider each element of security to ensure you have sufficient control over your documentation:
- Outside access: How secure are your documents from the outside world? How secure is the login process? Is the system updated frequently to guard against external attacks?
- Document control: Can you control who has access to each document in your virtual data room? Can you keep specific documentation hidden from all but specific users?
- Data control: Can users move documentation onto personal or external devices such as USB drives? While it may be secure in your virtual data room, you need to know what is happening to sensitive information.
Service
The level of service you receive shouldn’t stop once you’re past the salesperson. There are a number of things you should look for, including:
- Support: What type of support will you receive? You should put a service level agreement (SLA) in place to outline exactly what will be included, such as technical support or full project management. You should also confirm whether this will be 24/7 and whether there are any limitations in place.
- Reputation: In the tech world there are a lot of companies that emerge only to die away a few years later, and you cannot afford to take this type of risk when you have a deal at stake. The vendor you choose should have strong corporate backing, a prestigious client list, and a proven history.
- Reliability: You cannot afford for the system to fail you in the middle of a crucial stage of the deal, so you need to understand how reliable the data room is and that whatever the time of day or night, your documents are accessible to everyone.
If you’re looking at virtual data room providers, make sure you know exactly what you’re comparing when you receive a quote. Make sure that the provider not only meets your requirements but also that they go above and beyond to offer higher levels of service and reliability that could prove to be extremely valuable as you go through the process.
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