3 steps to a well structured transaction data room
DESCRIPTION
There are many pitfalls and obstacles to bear in mind when setting up a professional transaction data room.TRANSCRIPT
3 Steps to a well structuredtransaction data room
www.drooms.com
A poorly organised data room can result in a reduction
in the sale price of anything up to and beyond 20%Source: 2012 study from REAG and Drooms®
Common Mistakes
Documents are incomplete and not up to date.
Vendor due diligence has not been completed before bidders enter the data room.
Missing documentation is continually uploaded during the data room due diligence phase.
Request forDocuments
Data Collection
VendorDue
Diligence
Description of the Process in 3 Steps
Step 1Request for Documents
Index
Legal and financial advisors should be responsible for selecting the relevant documents.
It‘s best to use a standard index template that can then bemodified.
The organisation and structure of documentation is commonly dependent on the particular phase of the transaction
Sources
The document Sources need to be identified.
Documents often need to be collected from a variety of sources/people.
Document requests from public authorities are particularly time-critical.
Team and Schedule Planning
Appoint team members and team leader.
Use an NDA (non-disclosure agreement).
Team members need to be informed well in advance.
Monitoring of timetable.
Step 2Data Collection
Organisation
Centralise the data: Assemble of all the data in one central location.
Decentralise the data upload: Individual team members manage and directly populate specific elements in a data room.
Physical and Digital Documents
Make use of barcode sheets for physical documents.
Naming digital documents so that they are matched with corresponding target index points in the data room.
Progress Monitoring
Monitor current status of datacollection.
Progress reporting can be organised and presented in a variety of ways.
Populating the Data Room
Documents should be fed directly into the data room.
Specialised staff should be given access to conduct vendor due diligence.
Step 3Vendor Due Diligence
Vendor Due Diligence
Should be completed prior to bidder due diligence.
A dual-control principle is recommended in which a specialist in charge (e.g. for accounting) uploads the material and the project manager approves their release.