Virtual data room is a solution that will help organize and automate the process of interaction with contractors during private equity deals. So, what is this system, and how reliable it is? Here is more about it.
Basic aspects of private equity deals
Private equity (PE) is a lifesaver for struggling or growing companies that can’t get bank loans or publicly trade stocks. As a result, they resort to the help of private equity companies and funds that invest in the business directly, without the need for a public listing.
In private capital, there are two main concepts: PE-firm and PE-fund. The first is the management company, which raises funds for the fund by choosing a target company, that is, receiving investments, and investing in it. And a RE fund (or a direct investment fund) is a kind of repository into which investors transfer money for investment.
The PE fund receives funding from wealthy investors, pension funds, labor unions, insurance companies, etc. The fund operates a limited partnership between general and limited partners. The general partner contributes 1-3% of the total investment, makes decisions on the management of the fund.
The role of virtual data room solution in private equity deals
An important stage in preparing for a PR deal is the due diligence procedure. Due diligence generally means the careful analysis and evaluation of an object for investment in a business context. To make this procedure more productive, secure, and transparent most companies prefer using a virtual data room (VDR). These on-premise solutions are a working tool for sales and maintaining a client base. They have a standard interface, a certain set of functions and allow you to solve typical tasks for managing business transactions. Some of these modules are constantly used by the enterprise, while others, on the contrary, remain unclaimed.
The software usually includes modules for:
- maintaining a client base;
- collecting customer information;
- automation of the sales department;
- business process automation;
- control of activity of sellers and managers;
- planning and optimizing the time of work of employees;
- management of transactions and contracts;
- automation of loyalty programs;
- target audience analysis.
One of the most important modern trends in the development of the VDR market is the adaptation of interfaces for data room document management and data storage systems to remote access from anywhere and various mobile devices. There is a growing interest of customers in accessing VDR systems via netbooks, smartphones, communicators, tablets, etc. Specially designed interfaces for such devices increase the usability of systems and user mobility, allowing businesses to increase the speed and flexibility of all business processes.
Data room benefits
The modern data room management system has many advantages for PE deals as the software:
- ensures transparency of the document flow and all business processes of the company – all actions and movements of papers can be tracked and controlled;
- improves the discipline of work and execution of tasks – transparent systems are convenient for fixing the results and the fact of responding to the requirement;
- reduces the time spent on everyday routine work – you do not need to search for, coordinate papers for a long time, their turnover is accelerating;
- protects information from leakage, ensuring data security and strict delimitation of access rights;
- is based on the principles specified in the ISO quality standards;
- easy to implement among employees – subject to a well-organized staff training system;
- gives the company a competitive advantage, helps to maintain and develop internal corporate culture, and so on.