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  • Posted on October 14th, 2014 by Laura Fagundes
  • Tagged as:

tech MA
This year there has been a healthy amount of M&A activity, in terms of both volume and deal value, especially in the tech sector. The third quarter in particular has witnessed fascinating, not to mention record-breaking deals, including the largest IPO in history. So far, there have been quite a few individual deals worth well over $500 million, and some worth upwards of $1 billion. A handful of these huge deals involved acquisitions of gaming companies. These megadeals caused overall transaction values this year to soar well beyond 2013’s numbers, and we still have one more quarter to go.

Of those gaming company acquisitions, two are certainly worth mentioning. Microsoft acquired Mojang, the Swedish company that launched the widely played online game Minecraft. This purchase cost Microsoft $2.5 billion, a price tag that is likely indicative of just how popular the Minecraft game is around the world. Amazon also got in on the gaming action with its $970 million acquisition of Twitch Interactive. Twitch is purported to be the world’s leading video platform and community for gamers. Amazon already streams television shows and movies, so adding games to its repertoire certainly seems like a logical step.

A few other interesting deals that were announced this quarter that did not involve online gaming include Zillow’s acquisition of Trulia for $3.5 billion and Tutor.com’s acquisition of Princeton Review. Zillow and Trulia are already the big names for online home listings, with Zillow even delving into the Chinese real estate market. Now, these two real estate portals will be combining forces to further dominate the housing market. Although some real estate professionals may be concerned that this kind of merger will render them obsolete, there is no way to avoid the inevitable sharing of information online.

In addition, Tutor.com, which is exactly what its name suggests, an online tutoring service, acquired Princeton Review, a test-preparation company that offers its service in an array of formats, including live classrooms and online courses, as well as college admissions assistance. This merger seems like a natural fit, and we wouldn’t be surprised to see more online educational platforms merging, considering the growing availability of online instruction and its surging popularity.

Of course, deals of this size and magnitude require hours and hours of due diligence, including strict scrutiny of corporate documents and financials. This sort of secure document sharing and review can be simplified by using a virtual data room, which not only facilitates the M&A due diligence process, but also ensures the protection of sensitive and confidential information.

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  • Tagged as:
  • Posted on October 10th, 2014 by Laura Fagundes


While many people consider a virtual data room as an option for a sensitive business transaction, it is often based on the recommendation of counsel, an investment banker, or trusted advisor. Because of this, we’ve found that not everybody is clear on their utility- and have quite a few misconceptions about their use. In that spirit, we’d like to clear up  a few of those misconceptions once and for all so that you can make a smart, well-informed decision.

1. A Virtual Data Room is the Same as a General File Sharing or Collaboration Tool

While you will certainly share files within your virtual data room, a VDR is not the same thing as a file sharing service. File sharing services (like Dropbox, Box, etc.) were specifically built to allow you to easily share and collaborate on documents.  The security features of file sharing services are pretty standard and they’re especially effective at allowing you to share and edit everyday documents that don’t require a high-level of security. Virtual data rooms, on the other hand, were purpose-built around secure business transactions. They are highly-secure, highly-controlled data repositories designed specifically for securely sharing and storing corporate documents. VDRs generally have roles and permissions to limit access on a granular level,  and audit logs to monitor any activity in the data room. Some also require that an NDA is signed before entering the data room.

2. A Virtual Data Room is Only for M&A Transactions

Though originally used for M&A, virtual data rooms are now used for any project requiring sharing confidential information. We see them used during fundraising rounds, joint ventures, licensing deals, audits, strategic partnerships, litigation, board communication, etc. One person on our staff even used it to share documentation to refinance their house (though admittedly, that is not a common use case).

3. Virtual Data Rooms are Best for Short-Term Projects

While many use virtual data rooms for relatively quick transactions, they are also used long-term as a corporate repository. We have clients who set up their data room when raising their first round of funding and then maintain it throughout the life of the company. It essentially serves as a CFO’s secure and virtual filing cabinet. Keeping sensitive corporate documents stored and indexed in a VDR for the long-term helps to facilitate efficient audits, fundraising rounds, and other transactions in the future. You’ll always be ready.

4. All Virtual Data Rooms Are Basically the Same

As with any technology, this is not true. While you can assume that any purpose-built virtual data room solution will have taken above-average security measures, features will vary from one provider to the next. One feature we’re particularly proud of here at SecureDocs is that we include two-factor authentication with every data room at no extra cost. Decide what’s important to you and vet accordingly.

5. Virtual Data Rooms are Hard to Use and Expensive

Many of the ‘traditional’ virtual data room providers did have solutions that were challenging to use. They took a substantial amount of time to implement, users needed training, and the overall experience was clunky and confusing. That is no longer the case. There are a few virtual data room providers who have focused on providing a simple, efficient, and enjoyable data room experience. We are proud to be leaders amongst that group.

In terms of pricing- it all varies. There are still quite a few data rooms that are prohibitively expensive (especially for smaller companies) and there are some who are not. Our goal at SecureDocs is to provide a superior data room that is affordable to any type or size of business-which is why we offer a $200/month flat-fee price for unlimited users and documents. Be sure you understand the price structure of the solution you choose. Some data rooms charge flat fees, others charge by page or user, some have implementation fees, etc. It’s not always transparent and it’s not always presented up front.

Still unsure if you need a data room or have any other questions? Let us know- we’re always looking to help.

(And should you decide that you do need a data room, we offer a free trial).


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cut costs

Starting a business can be overwhelming and expensive. There are leases to negotiate, documents to draft and file, and countless other matters to address. Initial expenses often include rent, supplies, equipment, and of course, legal fees. Many individuals may be tempted to cut corners, and there are certainly areas where that may be possible and appropriate. However, when it comes to legal matters, companies should hire corporate counsel to ensure that everything is done correctly and to avoid potential problems down the line. Fortunately, there are several ways that companies can reduce legal expenses. Here are a few cost-cutting tips:

1. Be Prepared And Organized

Most attorneys bill on an hourly basis, and every single minute counts. Because of this, it is inefficient (and surely annoying) for an attorney to spend time sifting through emails or folders to find documents. It is imperative that a company’s documents and files are properly organized and easily accessible, so that legal counsel can quickly and effortlessly locate what they need. Of course, one of the best ways to optimize organization is to employ a virtual data room where important documents can be safely stored and easily shared.

In addition, companies should implement a document naming system that is readily understandable and clearly conveys the content of a particular document. The repetitive use of vague or generic terms such as “contract” or “agreement” will not suffice. Companies may have numerous agreements or contracts or whatnot, so each file name should be clear and specific. An organized virtual data room will save time and money.

2. Do Research

In some cities, law firms can be a bit like Starbucks with one located on pretty much every corner. Unlike Starbucks, however, law firms are as different as they are abundant. This can make selecting legal counsel downright daunting. Hopefully, a trusted colleague can make a solid recommendation. If not, companies should find industry-relevant seminars and conferences where networking can lead to a referral or connection. In general, companies should research and interview prospective legal counsel in almost the same way that they would evaluate a prospective employee. Although many companies are often eager to get up and running as soon as possible, it is more cost-effective in the long run to hire the right firm from the outset. 

3. Negotiate

This may come as a surprise, but legal fees are almost always negotiable. It’s not exactly flea market bargaining, but there is usually some wiggle room. And, these days, more and more firms are willing to depart from the traditional hourly model and may offer per project packages or will cap the annual fees once a certain limit is reached. There is certainly enough competition in the legal market that allows companies to be selective, and companies should not be afraid to negotiate legal fees.

4. Leverage All Resources

Many law firms utilize standard formation documents and agreements. Obviously, these templates will need to be tailored for each company’s unique purpose and needs, and although folks often prefer for partners to handle such matters, plenty of associates are more than capable of customizing these documents. Plus, after an associate creates the initial draft, a partner will be the one to review and finalize it. In general, the associate will have completed the bulk of the work, drastically reducing the amount of time that the partner has to spend. Thus, by leveraging these talented yet less expensive associates, the overall cost of a project can be greatly reduced.

5. Communicate Regularly

As soon as a firm is selected and a fee is negotiated, company and counsel should establish a communication plan. Everyone is busy, it is difficult to coordinate multiple schedules, and people can end up wasting a lot of time and money just trying to get in touch with each other. Thus, it is wise to create a communication schedule from the start. Depending on each company’s legal needs, updates may need to occur weekly, bi-weekly, or perhaps just monthly. This can be done via email or telephone. The key is to figure out what will be needed and when, and doing so in advance will save everyone valuable time and money.





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Scanning of transferring files.
Are you seeking outside investment for your startup? Are you considering a variety of term sheets from potential investors? Before you picture yourself throwing fistfuls of cash in the air, you might want to first consider whether your company will make it through due diligence investigations. There are a number of questions investors are going to want answered. You’ll want to prepare for those eventual questions by stacking the deck in your favor. Be prepared for due diligence file sharing by answering the following questions in advance:

Patented Technology

If your company is bringing a new product or service to market, potential investors are going to want to know you have secure patents in place. Be prepared to offer secure files on both your utility and design patents. If you have not applied for/been granted patents, your investors are going to want to know how you plan to protect their investment.

Product/Market Fit

Investors are going to want hard data on any marketing research and market validation your company has conducted. A database of users made up of friends and family is not going to suffice. Real dollars demand real customers; you better be prepared to show traction numbers and not just social media hot air.

Cost of Acquisition

In combination with your product/market fit information, investors are going to want you to provide data on your cost of acquisition numbers for new customers. While getting ‘crunched’ in TechCrunch is good for a short-term increase in users, those numbers will not last. You’re going to need to provide hard data on how you plan to acquire new customers and exactly how much you think those acquisitions are going to cost. Having that data readily accessible will make for a much smoother due diligence process.

Competition Analysis

Knowing the strengths (and weaknesses) of your competition is almost as important as understanding your own product. Be prepared to share files with investors regarding your competitor’s products and services. Forewarned is definitely forearmed when it comes to competition analysis.

Valuation Analysis

If you’ve ever watched the television show Shark Tank, you understand that valuations can be a huge stumbling block for investors. If you don’t want investors thinking you pulled your valuation numbers out of a hat, be prepared to share documents detailing why you think your proposed value is accurate.

These are just some of the files potential investors are going to want to have access to as they investigate your company. Utilizing the services of a secure data room for your due diligence file sharing can not only potentially speed up the process, but can act as an indicator to investors that you value their time and potential mentorship. Is your startup ready to have investors peek under the hood?

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Cloud computing upload and download icons
Dropbox was initially released in September 2008 as an online file sharing system. As of November 2013, Dropbox had reached the 200 million user mark. Dropbox currently integrates with various mobile operating systems and Web-based apps, making it possible for your files to be just a tap away no matter where you are or what device you may be using. No doubt, Dropbox is a popular service and does what it was designed to do well. Accessing files from multiple devices and allowing multiple viewers to see documents quickly has never been easier.  So, why would you want to consider alternatives to Dropbox for file sharing?

What Dropbox is Great For: Anytime, Anywhere Access

Dropbox is great for syncing your files across devices, automatically uploading your camera roll, and bypassing Internet service providers’ file size limits for email. If you want to share large documents with many people, access the ad you were just working on from your phone for brainstorming, or send your graphic designer new videos for your website, Dropbox is perfect. Dropbox is also a convenient way to index everyday work documents that aren’t of a critical nature that need to be accessed by several people. Dropbox for teams makes team collaboration easy. The list goes on and on. No doubt, Dropbox is a great service.

What Dropbox May Not Be Great For: Robust Document Security

However, Dropbox is not so great when it comes to securely sharing your company’s most confidential data. Dropbox has struggled to overcome concerns about security and privacy. For example, Edward Snowden, the former NSA contractor and security whistleblower, has said that Dropbox is “hostile to privacy” due to policies and methods that allow user data to be surrendered to government agencies. Dropbox has also been hacked on several occasions and has had its fair share of public criticism and privacy and security complaints. While this may not be of immediate concern to you, how your documents are accessed in the system probably is.

Keep in mind Dropbox’s original purpose: it was designed for stashing your personal files in the cloud so that you could retrieve them from a different computer or device. Though it’s evolved over time, Dropbox isn’t designed for more complex file sharing arrangement such as requiring signed non-disclosure agreements before allowing a user to access a shared link. If your information requires an NDA, it probably shouldn’t be in Dropbox.

Choosing Alternatives to Dropbox Based on Purpose

When evaluating any type of software, the primary question you must answer is what do you need the software to do? Do you need collaboration? Or, on the opposite end of the spectrum, would you prefer to restrict access so that a user can only view a document, in-browser, no download? Do you want your document watermarked or is that an unnecessary precaution? Again, how sensitive is your information? If you are going through due diligence and sharing all of your company’s intellectual property, security is probably a concern. If you’re collaborating on a white paper, it probably isn’t.

Here at SecureDocs, we love Dropbox, and use it for certain things. But all of our critical company documentation lives in a dedicated data room.

What does your company do?





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Laptop with red ring binders

Whether you’ve decided that it’s time to get your business documentation up-to-date and ready for due diligence, or you’ve just heard that building a corporate repository is a new best practice, it begs to ask: What is a corporate repository? And how is that different than the filing cabinet most businesses have been using for years?

Let’s start first by exploring what a repository is. According to Merriam-Webster, a repository is defined as:

A place where a large amount of something is stored; a person who possesses a lot of information, wisdom, etc.

In the case of a corporate repository, the term extends to a corporation’s documents. A corporate repository is a place where a large amount of a corporation’s information is stored, typically for the long term. Corporate repositories are not made public. Only users with specific roles and permissions granted may access documents in a typical corporate repository.

Think of a corporate repository as a virtual version of a CFO’s filing cabinet. This repository replaces that cabinet and contains all critical company documentation. Modern corporate repositories are hosted in the cloud on a virtual data room, where they are accessible as needed, but only by authorized users, as well as routinely backed up. Should a water main break and flood the CFO’s office, you can rest easy knowing that all of your corporate documents are safely stored in the cloud.

Corporate repositories also have the added benefit of being neatly organized, indexed, and searchable. This translates into less prep work should you go through a financial audit or enter into due diligence for fundraising or M&A.

In addition to restricting access to authorized users, corporate repositories generate detailed audit logs. This allows you to see exactly who accessed what and when. This information can be useful to gauge investor interest as well as for compliance or for  legal purposes should a dispute or IP infringement occur.

Now that you know what a corporate repository is, start your search for the right virtual data room to store it on at SecureDocs.

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Intellectual Property

Whether you’ve developed a new biotech product or want to incorporate another company’s intellectual property into one of your own technology products, you’ll soon find yourself navigating the complex world of IP licensing. Even with a qualified intellectual property attorney guiding you through the process, you should become familiar with IP licensing basics. Here’s what you need to know to before you start.

What are Intellectual Property (IP) Rights?

IP rights refers to the ownership rights of intellectual property such as a patent, trademark, or copyright. As the owner of intellectual property, you control how your intellectual property is used by others.

What is IP Licensing?

IP rights can be “licensed” to others in exchange for an agreed upon fee often called a royalty. For example, if you own the copyright to a book you authored, a movie studio cannot produce a movie version of your book without first entering into an agreement with you. The same is true if you hold IP rights to a vaccine, operating system, algorithm, or anything else for that matter.

What is a Licensing Agreement?

When you and another party reach an agreement, you will need to create a formal legal document. These agreements are generally referred to as IP licensing agreements, technology license agreements, copyright license agreements, or trademark licensing agreements. In many cases, multiple IP licensing agreements will need to be signed as multiple rights may be involved.

Why Enter into an IP Licensing Agreement?

If you are an IP rights owner, licensing rights to your property can bring in additional revenue as well as allow your company to grow. If you are a licensee, licensing another company’s technology allows you to create and sell products and services you wouldn’t have been able to do without access to that technology. In addition, if your company is involved in a merger or acquisition, you may need to sign multiple IP licensing agreements as part of the deal.

Entering into an IP Licensing Agreement

You’ve approached another party and both would like to enter into an agreement, now what?

-Start by getting an IP attorney.
-Gather documents such as product sheets, specifications, patent abstracts, protocols, and other relevant information and place them in a secure virtual data room.
-Require non-disclosure agreements before sharing sensitive information.
-Conduct due diligence. For example, does anyone else own the underlying technology? Is the intellectual property protected in other countries?
-Determine what rights will be exchanged and whether they will be exclusive or not.
-Determine and negotiate a fair fee.

Finally, have your IP attorney review, revise, and ultimately approve all IP licensing agreements and contracts before you sign anything.

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Investigate and analyze.

Going through due diligence during a possible merger and acquisition can be stressful. Many important items can get overlooked until the moment that they seem absolutely necessary- causing additional stress. Avoid these mistakes with this list of what NOT to do during sell-side M&A due diligence:

Do NOT skip your own due diligence. While it’s smart for businesses to perform due diligence when considering acquiring or merging with another company, it’s also smart for the seller. After all, you want the transaction to be as successful as possible, right? Start by investigating the buyer, its management team, its culture, and its previous acquisitions. Doing so could help to ensure a good cultural fit as well as gauge how prepared the buyer is to take your business to the next level. For example, if you are passionate about your business’s culture but find out that a buyer has a history of buying companies and implementing serious cultural changes, then you may want to find another buyer.

Do NOT skip getting organized in advance. The buyer’s team will need a great deal of information from you including cash flow statements, sales and marketing data, intellectual property documents, legal documents, employee bios and HR records, contracts, litigation documents, and more. The better organized you are, the smoother this part of the process will go. If you take the time to organize your assets in advance, you will eliminate a lot of time, pressure, and money going through corporate clean up. An even better idea is to maintain your records ongoing, so that you will not have to worry when the time comes.

Do NOT share highly confidential data haphazardly. Much of the information that you must share with buyers is highly sensitive, making it important to determine: who should see it, at which point in the process, and  how to securely share that information. You want to be sure you’ve protected your assets should the deal fall through. In order to ensure confidentiality throughout the process, get your legal team involved to make sure that each request is reasonable, appropriate, and sufficiently protected with non-disclosure agreements. While you’re at it, take a “minimum necessary” approach. For example, a buyer may want assurances that one of your inventions is patented, but is it really necessary to divulge trade secrets or share detailed design drawings and spec sheets?

Do NOT fail to use due-diligence specific technology to protect your interests. M&A data rooms are readily available to protect your interests. For example, uploading due diligence documents into a data room allows you to enforce NDAs, add identifying watermarks to documents, specify who can access documents, restrict printing, mark documents as “view only,” and monitor all activity in the data room with an audit log. This is helpful not only from a security standpoint, but also for gauging buyer interest. General file sharing solutions like Dropbox do not have these diligence-specific features, which prove invaluable during the M&A process.

If you’re on the sell-side of a merger or acquisition, you will be under pressure during due diligence. By avoiding the mistakes above, you’ll make your life that much easier.

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Online security written in search bar

New technology has allowed companies to expand and to make money in ways that would not have been possible before. Unfortunately, 24-hour Internet access, the proliferation of smartphones and electronic banking have also given rise to a new type of crime: cyber attacks. Cyber attacks occur when an unauthorized person accesses a computer system and steals information or causes problems. While preventing an online security breach may seem like a problem for a company’s IT department, today’s CFOs should care about cybersecurity and must become involved in protecting their companies from any online security threats. Below are three reasons why preventing an online security breach has become a responsibility of the CFO.

Security Breaches Negatively Impact the Bottom Line

The number of cyber attacks related to stealing customers’ personal information and financial data is on the rise. Last Christmas, Target made news when hackers stole more than 100 million customer credit card numbers stored in Target’s computer databases. Close to a year later, Target has spent approximately $148 million to correct the breach, provide affected customers with free credit screening, and update its security. As a result, the megastore expects a large drop in profits as it approaches the next holiday season and customers may be loathe to shop there this year.

Target’s case is not an isolated incident; in general, organizations experience 122 successful cyber attacks per week, and many of these may be related to stealing customers’ financial data and/or personal information.

Controlling Online Risk Reassures Investors

Online security risks represent a large potential loss for both consumers and businesses. For this reason, if a business doesn’t have adequate security measures in place, investors may become nervous about backing the business. Investors don’t want to put money into a business that may experience huge losses or close altogether because of a security breach. Thus, the CFO has a vested interest in cybersecurity.  Greater security combined with cybersecurity insurance and a clean up plan should a breach occur puts investors’ minds at ease.

The CFO Prioritizes Company Expenditure for Software

In order to protect a business from cyber attacks and potential losses resulting from such attacks, security policies must be followed across the company and put into place by the leadership team: the CEO, CFO, etc. The CFO has a particularly important role to play because he or she is responsible for making financial decisions involving the purchase of software. When making these decisions, the CFO must take online security into account so that he or she can accurately determine whether decisions are in the company’s long-term financial interests.

Cybersecurity is not just an IT problem; it is a company-wide concern. For CFOs, cybersecurity is of particular interest because breaches can wreak havoc on a company’s finances. CFOs should work closely with the IT department to understand security risks and take those risks into account when making financial decisions on the company’s behalf.

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It happens to all business, regardless of size. Important business documents pile up so you put them into files, and files pile up so you put them into a file cabinet, and as the business grows, you need another file cabinet and the cycle repeats itself.  There are other solutions. Virtual data rooms are often used as online filing cabinet- a corporate repository of a company’s most important documents. Implementing this can help move towards a ‘paperless’ office.

What is a paperless office?

The word “paperless” is a bit misleading, because every business of any size will still have at least some work that is done via paper. Tax forms, snail mail, and incoming paperwork from clients are just a few examples. The difference in a paperless office is that you most often develop, keep, and transmit documents electronically.

Many business functions can easily be done without paper. You can send and receive faxes, communicate with clients and vendors, share documents with investors, conduct banking and financial activities, or invoice clients and accept their payments – all electronically, and all without the clutter of paper.

What are the advantages of a paperless office?

Working in a paperless office takes some adjustment, but the benefits realized are well worth the effort.

Thirty years ago, only the largest organizations could afford to go paperless because it was expensive to make the change. The equipment was expensive, the technology was in its infancy, and the conversion process for old records was cumbersome at best. In today’s world, though, going paperless is affordable for businesses of all shapes and sizes thanks to affordable equipment, dramatic improvements in technology, and streamlined conversion processes for old records.

Some advantages of going paperless include:

-Lower costs for paper and printer supplies
-Less space requirements for filing cabinets and physical document storage
-Increased efficiency and productivity
-Easy to reference and access electronic records
-Efficient and controlled sharing of documents, especially with other offices or outside parties
-Greater continuation in the event of a disaster
-Environmentally friendly

Isn’t it hard to make the change?

Yes and no. It is relatively easy to go paperless on a “moving forward” basis by using your computer and and setting up an online repository to keep your company’s documents. The challenge for many business owners is to find the time to convert old records to electronic form.

You might choose to purchase your own scanner and work through your records a little at a time. A better option for many people, though, is to use a self-serve high-speed scanning or printing center. Using a high-speed scanner is easy, convenient, and dramatically speeds up the process of converting old records.

Important precautions

There are a important precautions necessary to ensure the safety and security of electronic files. Make sure archive your documents using a secure solution.  A virtual data room is a secure option as a place to start building your corporate repository. Most VDR solutions provide robust security and strict permissions for access and sharing.

With a little bit of planning and discipline you can easily take the necessary precautions and move forward with your paperless office.

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