A couple of years ago I was on the deal team for a $14M Series D financing. The company was already 10 years old, originally from Australia, had relocated its HQ to the US but kept a development team in Down Under. They also had a UK subsidiary as well as software implementation contracts and consultants in China and across South East Asia. Let me put it nicely, the financial and legal due diligence was a pain in the back. Although the company had the documents reasonably well prepared, it took forever to wade through hundreds of folders and subfolders on the shared drive.
Tons of shareholder agreements, previous investment agreements, business contracts, financial statements going back 5 years, employee contracts in 4 or 5 jurisdictions, lease agreements, incorporation documents, insurance policies – it was no fun.
When I had a question about a document, a cumbersome process kicked in where I pasted the identifier details of the document in question into an email, added my question and comments, sent it off, did this for countless other documents and then when the replies rolled in I had to match it with the documents and collate the Q&A in a separate spreadsheet.
By that time, I really wished I had an assistant. But I didn’t.
It doesn’t really matter whether the financing is for $4M, $14M or $40M in equity or debt – once a company has a certain size and/or age and/or includes several subsidiaries, managing confidential and sensitive business documents between various stakeholders such as tax advisors, lawyers, and consultants becomes a real issue. Often, this falls to the VP Ops or finance leader. Add the urgency of an acquisition into the mix and you have the perfect recipe for hair on fire.
About a decade ago a number of “virtual data room” software vendors emerged that would allow you to share all these sensitive and confidential business documents with multiple investors and / or acquirers at once, also allowing for the much-dreaded Q&A process in which representatives of the investors or acquirers would fire off their hundreds of questions and representatives of the seller (the Startups or their M&A bankers) would reply. And of course the bigger the deal size, the more formal the process.
And guess what else: The bigger the data room (measured in GB!), the pricier the virtual data room software. Current ranges span from $1K to $15K for a 3-months period, which is the typical due diligence period. These days, on the low-end, Dropbox and Google Drive serve the purpose of file storage and sharing with anyone. The main issue with those catch-all vendors is their “too easy sharing” which is great from a consumer point of view but not from a business confidentiality perspective. Can you say how many people have access to documents in your Google Drive right now? I couldn’t and I made the test using www.whohasaccess.com. After a quick scan (which I did not feel great about either, but that’s a different story) it turned out 276 people had access to various documents in my Google Drive. Probably a third of them I was barely aware I had been in touch with, another third I knew about the document in question but it was a zombie document and the final 3rd were actually projects or documents I was actively sharing or working on. So much about that!
Another story that I was told recently: A company was in an M&A process to get acquired. It was supposed to be a quick deal with a known tech giant from the US paying good $$$ for a European Startup. They used a known VDR software to share documents. Literally in the last mile of the process -after negotiation but before signing- the buyer asked about a certain document. The seller’s representative claimed they had provided the document and it was named in the “reps and warranties”. But they couldn’t prove when they had uploaded the document and when the buyer’s representatives had accessed the document. After a healthy back and forth with lots of cursing the final deal was to knock off $3M from the previously agreed purchase price.
Ah… gotta love those last mile hiccups.
That document became the most cursed document ever. For those of you who care, it’s called “audit logs”. It tracks who uploads what when and who reads when which document and therefore proves disclosure.
A few months ago, a couple friends and I started working on a platform to manage and share business documents. We wanted it to be a lean and mean document management platform similar to a data room but with one big difference: Our users want to use it continuously and not just during a transaction. It’s better than just Google Drive but not as clunky and pricey as traditional virtual data room software. We added all the features you’d expect: selective sharing with your lawyer, tax advisor, or consultants in a modern, easy-to-use interface that you expect in state-of-the-art “consumerized enterprise software”. Annotate documents, request comments from colleagues or your lawyer, be productive without emailing stuff around.
Because we value free stuff as much as you do, we added a template for an M&A data room. As in, which documents do you need to provide when? With time, we’ll add more templates and checklists.
To make it easy, we allow you to simply drag & drop an existing folder of documents (zipped or not) into our software and our Smart Artificial Intelligence Blockchain Big Data Algorithm (just kidding, but it is smart!) imports it into your account and data room with the same index structure.
We called it Worklean. Think of it as a streamlined and uncluttered all-in-one platform that brings simplicity and sleekness to your document management, powered by enterprise-grade features and functions. Simplify everyday management of confidential and sensitive business document, speed up transactions and bullet-proof your M&A or financing process.
We’re now in private beta and we hope you will join us. Sign up on www.worklean.com