With the stock market in near-record territory, experts predict interest in the equity markets will lead to a resurgence in IPOs after years of slow going. In a January 2018 Barron’s story, Fred Wilson, partner with the venture capital firm Union Square Ventures, said there’s a “pipeline of strong, mature and increasingly profitable” firms looking to go public in the next two years. This could include tech companies like Dropbox, Uber, Airbnb and Pinterest. Accompanying this growth of the IPO market will likely come a noticeable increase in the burgeoning virtual data room sector.
The IPO process is one of the most important yet complex events that a growing company will go through. From financial scrutiny by investors, auditors, and regulators to continuous collaboration amongst investment bankers, lawyers, and accountants your company must be prepared to manage large amounts of information and accompanying analysis.
VDRs are increasingly powering transactions for the investment banking community. And as much as they’re becoming “must haves” on the mergers and acquisitions side of things, a surging IPO market will require them as well because of the security, efficiency and cost savings they deliver.
So what is it about the virtual data rooms that make them so vital to the investment bankers and the clients they serve, especially when it comes to IPOs?
Data security: Information is everything when it comes to billion-dollar Wall Street transactions. Should key points of data fall into the wrong hands or leak out before an offering goes live, an investor road show or the entire deal could be compromised. One wayward email or unsecured document can change everything. As a result, bankers need to ensure the highest level of security for their files at all times.
Process and workflow management: Chains of emails are a surefire way to get document drafts confused. This translates into double work, inefficiency and the potential for errors to make their way well past where they should have been caught. With a virtual data room, documents all stay in one place and it’s easy to keep track of not just changes, but who is responsible for making them. This helps ensure that things run smoothly and efficiently.
Real-Time Analytics and Reporting: Many VDR platforms are built with real-time analytics and reporting features which gives companies insight into what their potential investors are looking at. The ability to see what documents clients are most active with can help companies plan their due diligence strategy accordingly.
The best of both worlds: FTP services are strong when it comes to transferring large documents and offering significant data protection. But they’re clunky and aren’t good for document management or integrating with leading software programs. Consumer-centric file sharing providers are much more user friendly, but in the area of data security, they leave a lot to be desired. Virtual Data Rooms, like SmartRoom, are built from the ground up to offer bests-in-class security with the usability that the modern business demands. This contributes to creating a service that meets the very specific demands an investment bank requires – be it for an IPO, M&A or other high-value transactions.
IPOs require countless hours of work and collaboration between multiple parties – the firm going public, bankers, lawyers, venture partners and more. With so many people working with so much information, a collaborative platform that provides multi-layered, bank-grade security with an intuitive interface can make all the difference.
Learn more about how SmartRoom’s virtual data room can help you or your clients during an IPO or other liquidity event.