Data room
A data room is a protected space in which the company to be sold provides a collection of documents for the purpose of due diligence (DD). In this data room, all documents are provided that the company to be sold wants to make available to the buying company.
Other users of data rooms are large projects such as B. construction or engineering projects in which the project participants have documents, plans, invoices, minutes of meetings, etc. v. a. m. exchange and process according to certain rules.
The data room is usually not set up in the company, but in a neutral location, e.g. B. with the lawyer representing the company. Similarly, virtual data rooms possible.
Types of data rooms
Physical data room
A physical data room is a collection of documents that is made available in a specific location.
Electronic data room
The use of IT-based digital data rooms is increasingly gaining ground due to the increase in international corporate transactions and the need to enable consultants and interested parties to access a data room across national borders . A digital data room allows protected access to information as part of due diligence. These are structured in a digital archive and secured against unauthorized access via an entrance area protected by encryption and password.
Advantages of the electronic data room
- Good, efficient access for distributed teams
- I. d. R. structured data collection
Disadvantages of the electronic data room
- Difficult communication between different teams on the buyer side
- Systematic evaluation of the due diligence priorities of the buyer by the seller possible
Green data room
The green data room is a data room that is made accessible to all parties involved in the transaction process after signing a confidentiality agreement.
Red data room
The red data room is only given to a selected group of people. It is typical that only consultants who are professionally obliged to secrecy are granted access to the red data room. The consultants who are professionally obliged to secrecy include lawyers, tax consultants and auditors. The red data room is often only opened in a later phase of the transaction so that only those bidders who are in the last phase of the transaction process have access.
procedure
planning
Data room content
The documents made available in the data room depend on various criteria. The question to be asked here is what the company intends to disclose at this stage. This always includes the audited annual financial statements, articles of association and an overview of employees. There must always be as much information as is necessary (for a sale), but without any business secrets such as B. To disclose the return on sales for individual customers.
Data room rules
Certain rules apply to the data room, which are strictly monitored:
- the user of the data room are ahead of due diligence to name
- the users of the data room sign the data room rules
- the presence is documented by appropriate lists
- no documents may be removed from the data room
- no photocopies or photographs may be made, copies are allowed
- Compliance with the rules is monitored by supervisory staff who are constantly present in the data room
execution
Data room workers
This is a team of lawyers, auditors and experts from the buyers put together by the buyer. Depending on the orientation of the company to be bought, experts from the areas of trademark and patent law, administrative law, tax law, environmental law and environmental technology, IT experts or insurance experts are also called in.
Data room work
All employees named according to the data room rules have access and thus access to the documents in the data room. They will review the documents critically and evaluate the content accordingly.
During the exam, it is possible to request copies of certain documents and to ask further questions. The seller can agree to these requirements in whole or in part and answer all or part of the questions. The buyer has no right to the return or an answer, but may make his decision about the purchase dependent on it.
Since it is not known at the beginning of the data room procedure which documents will later be received as copies, the data room employees try to transcribe or dictate all relevant documents as far as possible (PC, handwritten).
Another tool is the manager presentation, in which the company management presents the company and, if necessary, answers questions about the company directly.