For those considering selling a company in the next year, analysts are optimistic that 2013 will see a turnaround in the mergers & acquisitions market. However, the recession has made buyers wary and transactions are being subjected to deeper scrutiny and more in-depth due diligence processes. Now preparing your company for the due diligence process is more important than ever.
Preparing an Exit Strategy
To avoid having business screech to a halt during the sales process, it’s essential that companies keep all due diligence materials up to date, organized, secure, and stored in way for a buyer to easily review information.
Below are 3 categories of information that need to be prepared for inspection.
- REGULATORY COMPLIANCE: Buyers put themselves and their existing companies at risk if they acquire a company whose compliance practices are subpar. Since almost any compliance problem (even a recently acquired one) means that regulators can look into any other area of the purchaser’s organization.
- INTELLECTUAL PROPERTY: What could be worse than spending money to purchase a company, only to realize they don’t own the assets you believed they did? IP action is expensive and buyers want to avoid it at all costs. Companies want to see that the company they are considering purchasing has all of its IP properly protected.
- FINANCIAL HISTORY: Most buyers will want to see a valuation of company assets according to general accepted accounting principles (GAAP). Buyers are naturally interested in a company’s financial information to ensure they understand the true value of the company.
Those looking to increase their exit readiness should ensure all their documentation in each of these categories is accurate, organized, and easily presented to a potential purchaser—while also ensuring that it is held in a safe and secure area.
A User-Friendly Solution to Sharing Sensitive Data
A secure virtual data room is a great way to manage sensitive company information, and present it in a user-friendly way. If the information has been kept up-to-date, it also prevents tying up valuable company resources to prepare the necessary information for buyers. Just be sure the chosen solution offers strong encryption, multi-factor authentication, a redundant infrastructure, 24/7 monitoring and that it is SAS 70 certified to protect files from inappropriate access.