Virtual data room technology is rapidly gaining new positions. Digitalizing private equity deals are already an integral part of its functionality. So, how to organize such a deal in a cloud-based data room software?
Private equity deals in the cloud
Currently, large investing corporations are actively building up competencies in the digitalization of business processes. For this purpose, they use cloud-based solutions to move private equity deals into a secure collaborative workspace. This step into the world of direct transactions is the “digital economy.” It is an economy that erases borders and breaks barriers between people. It does not matter where you are and what time it is; the transaction can be completed in seconds, anywhere at any time, having a smartphone in hand and access to the network.
The ability to receive and provide services online requires high-quality and high-speed communication, reliable identification, equal access to data stored in information systems, a high level of information security, and the ability to prove one’s fundamental rights to digital assets. All these requirements can be met with the help of a virtual data room platform. It is a digital platform for organizing transparent business real-time communications and productive deal management.
Considering all the benefits of arranging important business procedures in the flexible data room software, we can state that The future of private equity is in the cloud. Moreover, virtual data is the basis for the technological development of the next generation of cloud technologies due to the instantaneous transmission of large amounts of data with minimal delay.
Digital data room – a new model of private equity deals
It is not uncommon for venture capital investments to put thousands of documents through their paces simultaneously by many due diligence specialists. The investment candidates are mostly young companies still in the development phase. Therefore, there is less information and more uncertainty than incumbent companies. With the help of a virtual data room, complex and highly sensitive due diligence checks can be made much easier and more transparent. Several hundred people on the investment candidate and investor side thus have controlled access to the documents required for the transaction at the same time.
A virtual data room is a progressive way of doing business without the movement of documents in paper form. It is a way to develop a single intra-corporate way of registration, movement, delegation, control over execution, and storage of private equity deal documents. Data room solutions imply the creation, exchange, and storage of documents exclusively in electronic form.
Data room software allows users to automate the following functions when arranging private equity deals:
- creating a document in electronic form;
- creating a document card with its attributes;
- the ability to form text according to a template using the values of variables from the document card;
- search for documents;
- formation of electronic documents, primarily letters, and certificates, on the letterhead of the organization;
- storage of documents in various formats;
- creation of document movement routes and control of its movement;
- primary and secondary registration of documents;
- classification of documents;
- control actions – sending reminders and notifications;
- coordination of documents;
- creating reports on the direction of documents;
- control over the execution of documents.
Numerous business-critical transactions, especially in the private equity sector, are already being carried out using virtual data rooms. Evonik’s sale of the carbon black business to Rhône Capital is a well-known example of this. It was one of Western Europe’s largest private equity deals in 2011.