A biotech roll-up is a merger or acquisition business strategy that involves the consolidation of multiple biotech companies into a single entity. The goal is to achieve increased efficiency, cost savings, a better product and services menu, and possibly access to new markets and technologies.
This biotech roll-up process is typically complex and time-consuming. Success requires careful planning and a team that can collaborate well and deliver their best work in a pressure-cooker environment. Success also requires a high level of security to protect confidential financial records, analytics, and proprietary product information. That’s why smart biotech companies use a virtual data room (sometimes called a virtual deal room for their merger or acquisition roll-up.
What is a Virtual Data Room?
A virtual data room (VDR) is a secure online platform that allows multiple parties to access, view, and collaborate on confidential documents and information related to a transaction. It is typically used in the due diligence phase of a biotech roll-up, where the acquiring company has the opportunity to review the financial, legal, and operational documents of the target company.
The VDR is most often set up and managed by the target company, but it can also be managed by a third-party vendor. It is designed to be highly secure and compliant with relevant regulations, such as the Health Insurance Portability and Accountability Act (HIPAA) and the European Union's General Data Protection Regulation (GDPR). Non-compliance can lead to significant fines, reputational damage, and even legal liability. In addition, it is important to consider potential antitrust issues, intellectual property disputes, and contractual obligations that may impact the transaction.
4 Reasons to Use a Virtual Data Room for a Biotech Roll Up.
1 Efficiency:
A VDR allows authorized parties to access and review documents in a single, centralized location, rather than transferring paper documents physically or sending electronic files back and forth via email, an instant messaging platform like Slack, or using file storage apps like Box, DropBox, Google Drive, or Microsoft OneDrive and SharePoint. A centralized location for all relevant documents saves a significant amount of time and effort and can reduce errors or misunderstandings.
2 Collaboration:
A data room allows multiple parties to collaborate and make comments on documents in real-time, which can facilitate the negotiation process and help ensure that all parties are on the same page.
3 Security:
The collaborative nature of the biotech roll-up process increases security risks. Team members collaborate with a range of third-party legal and regulatory experts, often from remote locations. The process generates large data files and extensive documentation. This collaborative process creates security vulnerabilities for both archived and work-in-progress documents. Hackers know the product development process and use AI-enhanced software to seek access points. Without enterprise-grade security, the risks of a cyberattack are high. And since the FDA now holds biotech product manufacturers accountable for security-related problems, the regulatory costs can be high.
A virtual data room provides a platform for secure document sharing. Among VDR providers, ShareVault stands out as the company with the most experience in working with Life Science companies. ShareVault has been selected by the Biotechnology Innovation Organization (BIO) and 40 other life science industry trade associations for their Business Solutions Program.
With ShareVault, all documents are automatically encrypted as they are uploaded. The VDR administrator invites participants, issues passwords, and logs user IP addresses. ShareVault’s strict permissioning protocols ensure that only authorized users have document access. Once authorized, users can access documents in the VDR from any browser or device, at any time, from anywhere. ShareVault’s ultra-secure VDR environment protects confidentiality even for participants in remote locations. At the appropriate juncture in the biotech roll-up process, the team administrator can provide access to the acquiring or merging company and, eventually, to regulatory agencies.
4 Auditability:
A ShareVault virtual data room automatically monitors and records every user action with a document - name of user, time of use, actions taken. The VDR administrator can generate a detailed record at any time. This audit trail is important for compliance purposes and can also help resolve any disputes that may arise during the transaction.
How to Set Up a Virtual Data Room for a Biotech Roll-up
Gather Necessary Documents:
Determine which documents and information will be included. For an M&A, you will need company performance financials, debt, assets, and liabilities, partner and vendor agreements, Intellectual Property licenses, court filings and records, personnel profiles of senior executives and directors, employee data and policies.
Determine the Scope of Services from your VDR Provider:
VDR providers offer a menu of services and prices. Fortunately, a ShareVault VDR is set up to accommodate a virtually unlimited number of documents. You may want to add ShareVault features like Dynamic Native File Protection (DNFP), which protects work-in-progress documents under development using apps like Word and Excel documents, or Collabloop, specialized software to assist the redlining process used to finalize contracts or offering statements. Review the ShareVault Pricing Plans, or contact a VDR expert for guidance.
Prepare and Upload Documents:
Once the virtual data room has been set up, the VDR administrator organizes folders and uploads documents. ShareVault makes this easy with a Due Diligence Checklist, a software tool that automatically generates folders and the user invitation and authorization process. The administrator can use handy ShareVault tools like drag-and-drop uploading, bulk uploads, and integration with file sharing apps to speed the process. Other time-saving ShareVault features include a “Favorites” document designation to speed a user’s return to a document; hierarchical tags, a hashtag system to populate multiple folders with the same document; and advanced search, with keywords sorted by relevance and with synopses that show the keyword used in context.
Invite the Acquiring or Target Company:
Once the virtual data room is set up and the documents are uploaded, the target company can invite the acquiring company to access the data room. The target company administrator will follow the permissioning protocols to the acquiring company with login information and any necessary training on how to use the VDR.
Monitor and Manage the Virtual Data Room:
The target company should continue to monitor and manage the virtual data room documents throughout the due diligence process. This may involve answering questions or providing additional information as needed, as well as addressing any issues or concerns that may arise.
Tips for Using a Data Room in a Biotech Roll-up
Stay Organized:
The VDR administrator must continuously monitor user activities to maintain order in the folders, which may include transferring documents from initial folders to new “For Review” and “Final” folders. Continuous monitoring keeps the due diligence team on track and makes a review by the acquiring company productive.
Use Redaction Carefully:
Redacting sensitive information is necessary for protecting confidentiality, but it is important to be careful not to redact too much. If the acquiring company is unable to fully understand the documents or information, it may lead to misunderstandings or delays in the transaction.
Communicate Effectively:
It is important to communicate effectively with the acquiring company throughout the process. This will help ensure that all parties are on the same page and can move forward with the transaction smoothly.
Conclusion
A biotech roll-up can be a complex and time-consuming process, but using a virtual data room can streamline the process and ensure that all parties have access to the information they need, all in an enterprise-grade secure environment. With careful planning and the choice of a quality VDR provider, a biotech roll-up and deliver the desired benefits.