Closing a financing or sale is never easy. Negotiating terms and drafting deal documents is challenging under the best of circumstances. But companies often make matters worse for them- selves by stumbling over issues that
increase costs, hurt negotiating leverage, delay closings, and even kill deals.
Business attorneys, whether finance experts or not,
can help clients avoid these costly stumbles. This article describes three steps in-house counsel and outside counsel can guide clients through to ensure that
financings and merger and acquisitions (M&A) deals
go more smoothly.
There are probably as many ways to approach “
transaction readiness” as there are finance attorneys. I prefer a proactive approach that includes all or some combination of these three steps: 1) creating a deal-ready
virtual data room; 2) checking it against a detailed due
diligence list; and 3) mocking up a “Schedule of Exceptions” — a document required to close most financings
and acquisitions. For smaller companies, simply building a data room is a big accomplishment. If resources
are tight, steps 2 and 3 can wait.
STEP ONE: CREATING A
Creating a data room is like piecing together a giant puzzle. For investors or
buyers, the data room is a highly organized repository that creates a detailed
picture of a company.
Data Room Selection
Familiarize yourself with two or three top
virtual data room platforms and compare
their strengths. Pay close attention to
how fees are calculated and how they will
grow as documents and users are added.
Minimum requirements include:
• State-of-the-art security, availability,
PREPARATION MAKES FOR
stability, and redundancy
• Capacity to quickly upload and down-
load large documents
• Intuitive user interface
• Flexible administrator controls to add
and remove users and groups of users
and assign varying degrees of user
privileges within the data room
• Tools to see who is using the data
room and what they are downloading
by Paul Swegle
Company for a
Financing or Sale