HOW TO MANAGE AN EFFICIENT & EFFECTIVE DATA ROOM

Harish Kumar, Manging Director 29 September 2016

IMPORTANCE OF DATA IN THE DEAL PROCESS Effective and efficient information sharing is critical to the deal process. The main attributes of a proficient information sharing process are data accuracy, preparation, speed and safety, as these will minimize potential risks for the buyer.

Data accuracy bridges the bidask spread by removing uncertainties and unknowns in a potential transaction

Preparedness plays a critical role in a sale transaction to attract investors, since due diligence is an expensive process

An efficient data sharing and storage facility should be easy and fast to set up, save time and expenses, and make administration easier and safer

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DATA ACCURANCY: COMMONLY FACED DATA ISSUES (1/2) Data accuracy can be proven as one of the most challenging aspects of the deal process. Challenges in data accuracy will vary depending on the seller’s commitment to proper information capturing, management and storage. Key data issues to address

Incomplete or missing system data and/or documents Discrepancies between loan documents and data tapes Issues with collateral data, valuation methodology and definitions Issues arising form non-compliance with regulatory requirements Lack of historical data or track record Frequent changes to policies and procedures

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DATA ACCURANCY: COMMONLY FACED DATA ISSUES (2/2) Empirical experience has highlighted several issues with regards to data quality and accuracy that are commonly faced during a deal process. Prompt identification and management of such issues will minimize their potential impact on the deal. Key data issues to address (c’ntd)

Multiple data-sources, with non uniform approach and inconsistent data between them Legacy systems may not support the information required for a complex analysis Manual data input is not performed in real-time, data-tape info vs current portfolio status may differ Data input and maintenance is commonly performed by nonspecialized resources (“garbage in-garbage out”)

Handling sensitive data creates increased costs and complexity (secure storage etc.) No single data owner, creating delays and increasing complexity in data collection 4

DATA ACCURACY & REMEDIATION Once identified, information gaps and discrepancies should be rectified in order to minimize the cost, time and risks attached to the buyer’s due diligence process.

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DATA PREPARATION & OGRANIZATION Prior to sharing with the prospective buyer, data should be prepared and organized according to the deal’s needs and characteristics. Virtual Data Rooms (VDRs) have become the industry standard for information sharing, as they facilitate for a well-organized, safe, time and cost efficient information sharing environment. VDR set up The quicker a VDR is set up and operational with all documents uploaded and organized the sooner the due diligence process can begin. Therefore, data room set-up should be considered as one of the process’ initial steps

Organizing Documents  Deal documents should be well-organized and named  An effective document index is consider critical  A staging environment is a best practice whereby folder structures and files can be easily organized and renamed before they are uploaded to the data room 6

DATA MANAGEMENT DURING THE DEAL PROCESS Protecting Documents  Assign the proper rights and protection levels to the correct people and provide credential protected access  Protection levels can range  To eliminate issues with document formatting and printing, convert documents into PDF format

Managing Participants  Throughout the deal, users are added/removed and user permissions change  Wizard-like tools allow to easily and quickly add and remove participants and apply document access rights

Accessing Remotely  Managing a VDR can