With thousands of businesses being the sold each year, business
owners decide to sell their businesses for a variety of reasons, such as
the loss of a spouse or a business partner, or because of lack of
profitability. Others may decide to only sale a certain division of
their business due to the discontinuation of a product line or for other
reasons.
Regardless of why business owners decide to sell their business, a
lot of effort must be put into getting the business prepared for the
sale.
One of the primary requirements to ensure that this process takes place in a smooth manner is to have the proper data to present to interested parties and / or investors. This information usually consists of historical financial information about your company’s past performance, such as financial statements consisting of profit and loss statements, balance sheets, and statement of cash flows. Other documents include valuations, company history, the highest and poorest performing product lines, banking information, management and ownership information, customer and vendor information, legal documents, contract agreements and other documents that may be requested.
Due diligence is also a major part of this process, whereby the information provided is verified by key parties.
The Convenience of Using Virtual Data Rooms When Selling a Business
The use of a virtual data room is a convenient way to manage the
merger and acquisition process. It is confidential, secure and
user-friendly. The virtual data room costs is very reasonable too, particularly compared the convenience that it provides.
A Virtual Data Room, often referred to as a VDR is somewhat of an
online storeroom used to store information and disperse documents. VDR’s
also share data and acts as a means to facilitate all aspects of the
due diligence process. It also serves as a means to facilitate private
equity as well as venture capital related transactions as well.
Previously, physical data rooms were the traditional mode of
facilitation, prior to being replaced by the virtual data room. The
traditional, physical data rooms previously facilitated the due
diligence process to disclose key documents. However, it has been
determined that the virtual data rooms are much more convenient, offers
high-security, are cost efficient and very effective.
Virtual data rooms are used across a wide variety of industries. So
regardless of what type of business you may have, they will be able to
accommodate your information.
They also work as an extra-net to accommodate bidders, along with
their advisers, whereby access is provided via the Internet during the
due diligence process of a merger and acquisition transaction. The term
extranet is basically a website that has limited capabilities and
control access. It uses a secure logon process that has been provided by
the vendor. And it is the vendor who can also disable this secure logon
process at any time.
Since the information contained in virtual data rooms are strictly
confidential, restrictions have been securely set. So activities such as
copying, printing or forwarding information to others has been
restricted. This is possible by using digital rights management designed
to provide full protection and security to the data.
The Role Of a Virtual Data Room During the Merger and Acquisition Process
The virtual data room plays a vital role during the merger and acquisition
process. It is positioned as one of the core repositories of important
data that pertains to selling a business. It houses important company
data that is needed for viewers to determine if purchasing the business
would be a viable acquisition.
The good thing about using virtual data rooms during the merger and
acquisition process is that the information remains confidential as it
is maintained in a controlled environment. It only allows key
individuals, such as bidders and their members or designated
representatives such as attorneys or investment bankers to gain access
to the information needed. Because of the state-of-the-art technology
that’s associated with operating VDR’s, it has been known to provide
such an increase in convenience, that the overall bidding process has
been decreased by approximately 30 days compared to the traditional
physical data rooms.
Due Diligence Specific Virtual Data Rooms
Using a due diligence specific virtual data allows business owners to
provide everything that is needed to all of the parties involved in the
business acquisition process. A due diligence checklist is normally
made available making the process much more streamlined for everyone
involved.
To summarize, the due diligence virtual data room
is where you are able to place all of your company’s relevant business
information (both historical and the future information of your
business,) so that it can be viewed by interested parties in a
controlled environment – all in one place – hence simplifying the
overall merger and acquisition process. The best part of all is that the
virtual data room costs are affordable too.
