Deloitte’s 2022 Global Divestiture Survey emphasizes the significant impact of the divestiture process, focusing light on its strategic importance in today’s business environment. In fact, 41% of respondents said the value they gained from their most recent divestiture exceeded their expectations.
This article delves into the different aspects of divesting in terms of business development and the role of data room software. In addition, the article includes a list of commonly sought characteristics in data room review resources.
What does asset divestment entail?
Divestiture, also referred to as divestment, involves the sale or disposal of a company’s assets or business units, whether partially or entirely. This takes different forms, including sales, closures, exchanges or even bankruptcy, and may involve both tangible and intangible assets.
Overall, divestiture is an effective strategy for companies and governments alike to restructure and improve their financial standing. However, it should be used wisely and only when it aligns with the organization’s goals and objectives.
Before we get into the benefits of data room services, we first understand the steps assets divestment goes through.
Enhanced security for divesting assets
A secure data room, also known as a virtual data room or VDR is an online platform for storing confidential information during business processes.
In the context of divesting assets, it is important to prioritize enhanced security. Ronald Hernandez, the founder of dataroom-providers.org, emphasizes this point:
“Divestiture process sets the course for the future of your organization. Your data’s security is the highest priority. I believe that virtual data rooms provide you with that confidence to navigate divestment with unmatched expertise”, – he stated.
Utilizing a virtual data room from reputable virtual data room providers greatly enhances asset divestment security, thanks to the following security features:
- Encryption. Encryption secures data both during transmission and while at rest, permitting access only to authorized individuals.
- Access controls. Granular access permissions ensure that only authorized individuals can view and interact with specific documents.
- Audit trails. Comprehensive audit trails provide a transparent record of all actions.
- Watermarking. Digital watermarking deters data leaks by identifying authorized users.
- Two-factor authentication. Extra layers of authentication prevent unauthorized entry.
- Secure file sharing. Controlled document sharing minimizes the risk of data leakage.
- Automated alerts. Real-time notifications flag any suspicious activities, strengthening security.
Streamlined divestment due diligence with virtual data rooms
In corporate transactions, inadequate preparation can result in an inefficient due diligence process, gaps in strategic planning, and unproductive communication. These flaws could put at risk the entire business deal.
Due diligence virtual data room plays a key role in optimizing and streamlining this difficult process. Here is a checklist to set up a virtual data room for due diligence in the context of asset divestment:
- Define scope. Clearly outline what information is needed.
- Choose a VDR. Select a specialized VDR provider.
- Configure the VDR. Customize it for asset divestment.
- Organize assets. Categorize and upload asset information.
- Enhance security. Activate strong security features offered by VDR.
- Assign roles. Define user roles and permissions.
- Train uers. Provide training for VDR users.
- Test accessibility. Verify access for users.
- Enable communication. Establish communication channels.
- Monitor audits. Keep a record of user actions.
- Simulate due diligence. Test the setup in a mock run.
- Initiate divestment. Start the asset divestment process.
The role of VDR in collaboration while divesting assets
Asset divestment typically requires collaboration among various stakeholders, but it can be difficult due to the sensitive information involved and the need for coordinated decision-making. Recent statistics reveal that in 2023, around 65% of companies plan to conduct more events and meetings, emphasizing the growing need for efficient collaboration tools and strategies in the corporate world.
In turn, data rooms for investors act as indispensable catalysts for streamlined collaboration:
- Instant messaging and chat functionality
- Real-time document sharing and editing
- Annotations and comments for document collaboration
- Notifications for updates and changes
- Collaborative whiteboarding or virtual meeting capabilities
Cost-efficiency and accessibility in divesting with VDR
Cost-efficient and accessible VDRs, also known as M&A data rooms, are pivotal in today’s asset divestment landscape. According to KPMG’s M&A cloud data report, over 40,000 companies already benefit from data management solutions, like virtual data rooms. These innovative platforms not only streamline the divestment process but also significantly reduce costs.
Moreover, VDRs provide numerous cost-effective advantages, such as:
1. Reduced travel costs. Virtual data rooms (VDRs) minimize the requirement for physical presence and travel. Also, there is no need for in-person meetings and document sharing.
2. Enhanced accessibility. Participants may access critical divestiture papers from anywhere, at any time, ensuring that stakeholders remain informed and engaged despite geographical boundaries.
3. Time savings. VDRs offer faster document access and communication, which saves time and speeds up the asset disposal process.
4. Data analytics. Advanced VDR features include data analytics tools and even AI that help in tracking and optimizing costs associated with the divestment process.
Key takeaways
1. VDRs enhance security during asset divestment. They provide encryption, access controls, audit trails, watermarking, 2FA, secure file sharing, and automated alerts to safeguard information
2. Effective collaboration is crucial for asset divestment. VDRs enable this through instant messaging, real-time document sharing, annotations, notifications, and collaborative whiteboarding.
3. VDRs are valuable tools for modern businesses, reducing travel costs, enhancing accessibility, and saving time. They also offer data analytics for cost optimization.
