3 steps to a well structured transaction data room

3 Steps to a well structuredtransaction data room

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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.