November 13, 2020

Needle in a Haystack: Speeding Up Legal Due Diligence Responsibly

By Steve J. Tie Shue, Senior Director - Product Marketing

Thirty days. More than half of sell-side M&A legal advisors report having thirty days or less to complete due diligence. This often feels like trying to find a needle in a haystack within an impossible timeline. Understandable since missing target dates or – even worse – delivering inaccurate or half-baked recommendations to clients can negatively impact a lawyer’s reputation well beyond a specific transaction. Dealmakers can reduce anxiety and bolster deal team confidence by choosing VDRs with three crucial capabilities. Each proving beneficial to the buy-side and sell-side alike.
1. Experience the twofold data room benefits of AI/ML organization tools

The virtues of a well-organized data room likely deserve a dissertation. However, for purposes of this blog, I’ll focus on the immediate benefits to legal advisors – it significantly reduces work times. AI/ML-enabled platforms allow for better-organized VDRs that help dealmakers work faster whether they are tasked with setting up a data room or reviewing documents within it.

For example, the one-two punch of AI indexing and smart categories in Datasite Diligence has been shown to reduce work times by up to 40%. These features automatically suggest categorization and placement of files to project admins upon upload – a particularly compelling proposition for the more junior members of a deal team. Once the data room is share-ready, end-users tasked with reviewing files benefit from greater consistency in organization and filing logic.

2. Make in-app redaction a non-negotiable for all data rooms

Redaction is essential for sell-side advisors. It needs to get done – and eventually in the deal lifecycle it may need to be undone. Luckily, using in-app redaction capabilities to mark and unmark terms exist. This advancement in VDR technology not only speeds up the process of redaction, it also bolsters confidence in the depth of the review.

Use of Redaction AI in Datasite Diligence shrinks timelines by as much as 80% compared to manual processes. It does so through a combination of pattern recognition as well as allowing users to bulk redact and categorize for redaction reasons.

Product Redaction Example
3. Avoid “gotcha” moments in legal due diligence with OCR search

Even well-organized VDRs have their limits in helping to effectively work through legal due diligence – particularly when hundreds or thousands of documents are at play. Check with any veteran corporate lawyer or paralegal. They’ll readily share experiences of blurry-eyed, late-nights spent painstakingly reviewing files one-by-one because a deal room’s search capabilities didn’t extend to PDFs, images, or scanned documents. Enter optical character recognition (OCR) search capabilities – making it possible to convert different file formats into editable and searchable data. Invaluable for legal teams who live in perpetual fear of missed T&Cs. This isn’t exactly new technology and it’s startling to see the number of data room decision makers seemingly reinforcing a status quo of using platforms without OCR to manage deals – regardless of size.

Thirty days. That’s an ambitious timeline to complete due diligence. However, the right VDR will deliver the capabilities and confidence needed to meet target deadlines without compromising accuracy or integrity during your legal review.

Click here to schedule a time to learn more about Datasite Diligence.

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Datasite provides secure software solutions for managing the full spectrum of financial transactions — including M&A, restructuring & administration, and capital raising. Our intuitive platform offers ironclad security enabling file sharing and collaboration within and across organizations. More than a virtual data room (VDR), Datasite supports advisors and their clients across the entire deal lifecycle with secure collaborative software that shortens timelines for buy-side and sell-side teams from deal sourcing and deal preparation to post-merger integration (PMI) while meeting regulatory compliance — including GDPR and CCPA requirements. As the premiere virtual data room for M&A due diligence globally, Datasite is consistently recognized for breakthrough technologies like our AI/ML-enabled capabilities and automated redaction tools. Beyond due diligence, Datasite provides transaction and document management solutions for investment banks, corporate development, private equity, and law firms across industries.