19/8/2024
By Sander Haukdal Larsen, General Manager
Until the 21st century, transactions, capital increases and restructurings of limited companies were carried out using physical data rooms, or document vaults, as they were called at the time. These were strictly guarded and enclosed rooms where the seller of a given asset could provide copies of all relevant company information to potential buyers. Like Henry Ford's revolutionization of passenger transport with his Model T, there was also a need in the transaction market for new solutions that could simplify and streamline existing processes. These needs formed the basis for what we know today as virtual data rooms.
A data room is a tailor-made IT solution intended to support adue diligence process. A data room is a secure digital space where the seller of a given asset can efficiently share relevant documents with one or more potential buyers. Typically, the buyer sends arequest list to the seller with an overview of all the documentation they want to make available in the data room. It is then the seller's job to upload and structure the information according to the submitted request list. Typically, information about the company (history, minutes, shareholder register and annual accounts), contractual relationships (supplier and customer agreements, etc.), IT and technology (system architecture, rights, fulfillment of product requirements), real estate and fixed assets - to name but a few.
In the previous section, we've covered the initial use of data rooms, but the digitization of due diligence processes opens the door for data rooms to become so much more than just a system for secure document sharing. A key function of any data room is to facilitate a smoother flow of information between buyer and seller. The buyer, who has the obligation to investigate, must be able to easily request additional documentation, ask questions about already uploaded files and general questions. If there are several potential buyers in the same data room, it is also crucial that the data room offers watertight barriers between the various stakeholder groups, so that all parties can be sure that their work is not visible to unwanted parties. This is where access management comes into play, allowing the vendor to define who should have access to see what, and possibly what restrictions should be made in the data room.
At ENVE, we believe it's time to rethink the use of data rooms. We know that data room users currently often have to rely on third-party solutions, email and Excel to manage their due diligence processes. Our goal is to move the work processes back into the data room so that it's no longer necessary to use several different systems to carry out the company review in a satisfactory manner. We therefore offer a holistic work tool that focuses on, and facilitates, collaboration and simplified work processes through visualization of progress and automation of due diligence reporting. These are some of the features ENVE delivers to make our customers' workday smoother, and you can read more about the functionality we offer here.
At the same time, we believe it doesn't stop there. The right functionality in the right place in a company review will help to further simplify due diligence processes and transactions. That's why we're developing functionality for automated clause recognition, KPI aggregation and visualization, and improved content search, so that our users can make better use of the information available. These are among the features under development that we believe will be key to delivering tomorrow's data room for seamless and efficient transactions.
