Virtual Data Room for IPOs

If you are planning an IPO, you cannot do without a secure collaborative file-sharing platform. The data room is the basis for deal document management and business processes. It includes the main technologies and basic objects designed to store information, accesses it, and provide the user with a convenient interface for work.

Virtual data room: how to prepare for IPO?

Few events in a company’s life are comparable to an IPO in scale and impact. During the IPO, the company’s shares are sold to public investors for the first time, after which these shares begin circulating on the stock market. A public listing fundamentally changes the legal and economic structure of a firm. In contrast to the focus on the interests of a narrow group of owners of a private company, the company’s management is now accountable to a new broad group of shareholders. In addition, an IPO can be used to raise capital to expand a business, increase shareholder liquidity, improve a company’s reputation, and create valuable currency hares that can be used to make acquisitions and reward employees.

The specifics of each company’s activity and its readiness to enter the IPO are also reflected in the timing of the exit. Large market players are usually more ready for the deal. It is due to their internal readiness and popularity among many investors. As a rule, investors actively monitor high-yield industries and promising market players. And most of the time required for their release is spent on determining the optimal placement package and choosing the most favorable moment on the market.

Besides, organizing a secure and convenient collaboration workspace for sharing data during the deal and due diligence procedures is also an indispensable preparation stage. The virtual data room is a suitable solution for conducting such business deals. Preparing for IPO transactions in a data room includes the full range of necessary services: risk analysis of the acquired asset (due diligence), development of an optimal mechanism for concluding a transaction, support for negotiations between the parties, preparation and verification of all documents that will be needed to complete a transaction, control over the signing of an agreement and evaluation of its results.

The functionality of the data room software

The data room platform consists of client and server parts. Server components allow you to create all the necessary structures for storing data, maintain their integrity in the future, provide access, receipt, update, and deletion of data by the user following his access rights concerning this document, as well as many other functions. Client components provide the end user with a convenient and understandable interface for working with the information in the system database, including its search, viewing, and modification. Cards are grouped into folders that provide logical and orderly storage of documents according to the rules established in the organization.

The IPO data room provides the following capabilities:

  • Unified mechanisms for storing and presenting information, delimiting access rights to electronic documents and actions with them
  • General means of navigation and access to data and organization of the user’s workspace
  • The general structure of directories, available tools for searching and extracting information
  • Unified routing and document lifecycle management, development and configuration tools, unified infrastructure for managing and administering applications
  • The system is implemented in a three-tier architecture, which provides the customer with scalability and security.

Moreover, the introduction of electronic document circulation increases security, thanks to reliable digital signature encryption algorithms. No third party can sign the document for you. 

What is Data Validation?

A validator is a method for validating data while saving an element’s model. This article will consider the data validation process and its main techniques. 

The purpose of data validation

When exchanging data between different information systems, sometimes it becomes necessary to check data for compliance with certain criteria. For example, it can be checked for types, value ranges, fields filled, correct relationships between several models, and more. Although, on the one hand, validation is an additional cost of time and resources, on the other hand, it can significantly reduce the time for subsequent debugging and verification when modifying the exchange.  

Validation occurs when it is impossible to assess the conformity of a product, process, or system to customer requirements before the customer starts using the product. For example, if we are talking about software, validation code is built into it. The customer enters this code if the product meets their expectations and performs the necessary tasks. Otherwise, the product’s access is terminated, its improvements are carried out, or the contractor returns the money.

How to validate data?

Wherever validation is performed, it can be done in several different ways, depending on what constraints are placed on the data:

  • Character check. As a rule, such reviews are performed in the user interface as data is entered.
  • Control of individual values. For the user interface, it is a check of the value in a separate field, and it can be performed both as you type and after the input is completed, when the field loses focus. For a program interface (API), this is a test of one of the parameters passed to the called procedure. It is a check of some read fragments of the file for data received from a file.
  • The set of input values. It can be assumed that some data is first transferred to the program, after which some signal is given that initiates their processing. For the program interface, this type of validation involves checking the set of input parameters of the called procedure; for the case of receiving data from a file, this is a check of all read data.
  • Checking the state of the system after data processing. Finally, there is the last way you can resort to if the input data validation fails – you can try to process them but leave the opportunity to return everything to its original state. Such a mechanism is often called transactional.

A transaction is a sequence of actions that either all complete successfully or some failure occurs when performing a single step. So, validation can be performed during the execution of the transaction, and the last check can be performed at the very end of the data processing transaction. At the same time, we are no longer validating the data itself but the state that turned out after they were completely processed. If this state does not satisfy some restrictions, we recognize the input data as invalid and return everything to its original form.

Who does the validation?

If the company is large, its structure often has a special quality management department, which organizes the validation process. The second option is to attract third-party specialists from specialized firms. In both cases, let’s pay attention to the fact that the task of employees is precisely the organization.

The work as a whole is headed either by the head of the organization or the direction director. He sets goals, allocates material and financial resources, and controls the result. Next, quality management specialists identify processes and products that need validation.

Why do we need a virtual data room for Mergers and Acquisitions?

This article will analyze the stages of M&A transactions, what needs to be controlled when signing them, and how transactions are structured to reduce risks. We will consider the role of data room software in such deals.

The peculiarities of M&A deals organization

The organization of a typical merger or acquisition process is divided into three main phases: preparation for merger and acquisition, transaction, and integration of companies. Each stage of the company’s transformation has its characteristics and involves several measures that complicate the formalization of this process and the calculation of risks during the reorganization.

To minimize the risks of deals, they must first be properly structured. We are talking about evaluating M&A transactions from different points of view – legal, economic, tax, etc., followed by an analysis of weaknesses and their subsequent elimination. During such procedures, business-critical data is processed. Therefore, the need to organize a secure collaborative workspace arises. In this case, a virtual data room is a perfect alternative. This digital platform serves as a basis for most business transactions, including M&As, IPOs, capital venture and real estate deals, due diligence, etc. 

Virtual data room in the M&A transaction

The data room is an operational management system that provides electronic M&A deal management, order execution control, project management, customer interaction, the collaboration of contractors, and many other business processes are also configured.

Having received the document for approval, the user, depending on the access rights he has, can make changes to the draft document itself, express his thoughts and comments in the comments or the form for free discussion, approve the draft or indicate the need for its revision. In working on a project, new versions of a document can be created. At the same time, all previous revisions are preserved, and there is always the opportunity to return to a previous version or track the history of changes.

How can the company benefit from using M&A data room?

The virtual data room ensures the following benefits for its users when organizing the M&A transaction:

  • The use of a single repository of information and the ability to generate standard documents according to specified templates facilitates the preparation process.
  • After preparing the draft contract, following the business processes adopted in the organization, the electronic document management system can automatically send the draft contract for approval. Depending on the additional parameters of the agreement, the route and sequence of this approval may vary.
  • Managers can get a visual report on the performance of employees when negotiating contracts.
  • When editing a draft contract, the history of the changes made and all previous versions of the draft contract is saved.
  • After the approved draft contract is registered, responsible employees will receive a convenient tool for monitoring the fulfillment of obligations under the contract.

Thanks to the possibilities for organizing external document management, remote counterparties of the organization can take part in the joint review and approval of contracts. In addition, it is possible to print a traditional approval sheet on paper. Furthermore, with the help of additional system options, the legal significance of electronic signatures on the contract is ensured. In the future, using the mechanisms of attributive and full-text search, a custom rubricator, and links of various types between documents, the system provides quick access for employees of the organization to contractual documentation under their access rights.