28 June, 2023

“Redlining” is the term for developing and finalizing a complex transaction document, like a contract. The redlining process typically happens twice: first, during the development of the contract term sheet by one party; and second, in the process of negotiating the final contract and its terms.

Redlining in Contract Development

Developing a contract is time consuming and often requires collaboration among a large group—a core project team plus input from multiple departments, subject matter experts, lawyers, and analysts. While the process often requires many documents used as references, the contract itself boils down to a single document: the contract term sheet. The process of developing that document is called “redlining”.

Steps to Redlining a PDF Contract

To redline a PDF contract, you typically need to follow these steps:

Open the PDF: Launch a PDF editing software or application that allows you to make annotations and edits. Adobe Acrobat Pro is a popular choice, but there are other options available, including Foxit Reader and Preview on macOS. Familiarize yourself with the terms and conditions of the PDF editing software you are using as specific tools and functionalities may vary.

Activate Markup or Editing Tools: Examine the toolbar menu to locate tools that provide markup or editing capabilities. Most word processing software includes:

Highlight: an array of colors that indicate copy that is to be reviewed or revised

Underline: Can be used as an alternative to highlighting; often used to bring attention to words that might be replaced to improve clarity or drive home a point

Strikethrough: Text to be deleted

Text Insertion: Tool to add text

Establish Editing Protocols: Since redlining is collaborative, make sure your team is onboard with the markup conventions that will be used to work on the contract. Common color-coding conventions are red for deletions, blue for additions, and yellow for general comments.

Review the Contract: Have the team review the contract carefully to identify words, clauses, or sections that need improvement. For a contract, that review should include members of the legal team and, in some cases, experts in regulatory matters.

Highlight Text: Use the editing tools to mark up the text. For efficient redlining, make sure the entire team is engaged in the process.

Add comments: Utilize the comment or note feature to explain proposed changes. Word processing programs generally have those comments appear to the right of the main body of the contract document. In making a comment, clarity is important: provide a clear explanation of what and why a change is needed. Collaborators will be able to review comments and add their own or click to show their agreement.

Create a Version History: Collaborators may want to take a second look at an earlier comment, or the team can decide to revert to previously used language. Most word processing software retains a record of the latest changes to a document, although Word and Google Docs delete earlier versions when a newer version is approved. Among redlining software, only ShareVault’s Collabloop retains a detailed history of all versions.

Final Review: Before signing off, have everyone take a final review of the contract document. Since the goal is a contract that furthers a company’s interests and protects it from risk, every word is important! Make sure the company’s legal team is part of the final review.

Save the Edited PDF: Once the redlining process is complete, save the document as a clean PDF. It’s a good practice to maintain a copy of the original PDF contract as a point of comparison.

Save a Final Version History: Once the team has arrived at a final contract document, version history has little practical value. However, a contract that is subject to review by investors or government or industry regulators often requires a detailed version history as an addendum to the contract submission.

Prepare Your Team for Additional Rounds of Redlining

While your team worked hard to generate your best version of a contract, that contract needs acceptance by your intended partner or customer. In most cases, that means the other party will initiate a redlining review of your contract proposal, which will then initiate your redlining of their redlining... until both parties have an agreed-upon contract.

Collabloop is Secure Software Contract Redlining

ShareVault, the top-rated source for an ultra-secure virtual deal room, developed task management software specifically for redlining: Collabloop. The benefits of using redlining software like Collabloop include:

  • There is a single version of the contract—collaborators are always working on the same document
  • When a party makes a comment or revision, their input is visible to everyone, much as it would in Word’s track changes annotations
  • Comments and revisions appear in real time, which improves the speed of collaboration
  • Everyone involved can identify the source of a comment without resorting to email, Slack, and other less secure platforms
  • Collabloop is housed in a ShareVault VDR ensuring that every version of the contract document—and all supporting reference documents—remain protected throughout the contract development process

Once the contract is ready for submission, the contract development team can authorize individuals from the receiving party to enter the secure VDR environment to review their contract proposal.

Start with a Secure Platform for Collaboration

ShareVault’s Collabloop is embedded in a ShareVault virtual data room and provides enterprise-grade security for the document and all the collaborating parties.

But ShareVault offers much more. Redlining a contract also requires the ability to store and share a large number of confidential reference documents. The best solution for confidential document storage is an ultra-secure online environment, like ShareVault’s virtual data room. With ShareVault’s VDR, the team can store and access an unlimited number of documents, and the redlining project leader has control over who has access to documents and what actions may be taken.

Additional security features of the ShareVault VDR include:

Automatic encryption of all documents at upload
Registration of the IP address of every user device
Two-factor passwords
Remote shredding of any document, even after it has been downloaded
Integration with DocuSign, for final contract signoff

24-hour Support

ShareVault knows that with a contract on the line, time is everything. That’s why ShareVault provides round-the-clock support from our IT team, who can answer questions and resolve issues quickly and efficiently.

Have Questions? Let’s Talk!

Collabloop redlining software and ShareVault’s secure virtual deal room provide maximum document security and speedy contract development. Since each company has unique document security needs, ShareVault feature sets and pricing are customized to fit your company. To receive a customized ShareVault proposal, contact us today!

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