Data room exit and closure are the final steps of a deal execution process, where you wrap up the due diligence activities and secure the confidential information shared with the potential buyers or investors. This article will guide you through the best practices of planning and executing data room exit and closure, and help you avoid common pitfalls and risks.
Before you exit and close the data room, you need to assess the status of the data room and its contents. You should review the data room activity reports, such as the number of users, documents, downloads, and views, and identify any outstanding requests, issues, or queries from the parties involved. You should also check the data room security settings, such as access rights, encryption, and watermarking, and ensure that they are compliant with the data room agreement and the deal terms.
Effectively planning and executing a data room exit and closure involves a strategic and meticulous approach. Define clear exit criteria, communicate the plan to stakeholders, and initiate a thorough cleanup of the data room, removing unnecessary files. Review and adjust access permissions, perform a final backup of critical data, and ensure compliance with relevant regulations. Notify and coordinate with third parties, secure data transfers if needed, and document each step of the closure process for future reference and auditing. Conduct a final review to verify that all exit criteria are met before making an official closure announcement. Archive documentation and conduct a post-closure evaluation to gather feedback,
Once you have assessed the data room status, you should communicate the exit and closure plan to all the relevant stakeholders, such as the data room provider, the seller or the target company, the buyer or the investor, and the advisors. You should inform them of the expected timeline, the actions required from them, and the consequences of the exit and closure. For example, you should notify them of the date and time of the data room shutdown, the data retention and deletion policies, and the post-deal obligations and support.
Archiving the data room contents is a crucial step to preserve the evidence of the due diligence process and to comply with the legal and regulatory requirements. You should archive the data room contents in a secure and accessible format, such as a DVD, a USB drive, or a cloud storage. You should also include a data room index, a log of all the data room activities, and a certificate of completion. You should distribute the archived data room contents to the authorized parties, such as the seller or the target company, the buyer or the investor, and the auditors.
Terminating the data room access is a necessary step to protect the confidential information and to prevent any unauthorized or malicious use. You should terminate the data room access for all the users, except for those who need to perform post-deal tasks, such as integration or dispute resolution. You should also revoke the access rights for any third-party applications or devices that are connected to the data room. You should confirm that the data room provider has terminated the data room access and deleted the user credentials.
Deleting the data room data is a vital step to ensure that the confidential information is not exposed or compromised. You should delete the data room data from all the sources, such as the data room server, the backup server, the user devices, and the third-party applications or devices. You should also delete any copies or duplicates of the data room data that are stored elsewhere. You should verify that the data room provider has deleted the data room data and provide you with a certificate of deletion.
Evaluating the data room performance is a helpful step to measure the success of the deal execution process and to identify any areas of improvement. You should evaluate the data room performance based on various criteria, such as the data room functionality, usability, security, reliability, and cost. You should also solicit feedback from the data room users, such as the seller or the target company, the buyer or the investor, and the advisors. You should use the feedback to improve your data room strategy and selection for future deals.