due diligence

Let AI assist you with your next Legal Due Diligence

Intro

it’s absolutely critical for buyside teams to move with speed and confidence on decisions about which deals to pursue. Traditionally, buyers have had to navigate due diligence manually, using inefficient processes. These lead to lost time, incomplete analysis or missed red flags. This not only affects the buyside. Delays in a deal due to human oversight and inefficient processes slow down the deal considerably for the sell-side as well. These delays can have a domino effect, as slower due diligence can potentially impact the valuation of the deal.

Some of the challenges with the traditional approach to doing a Due Diligence are:

  • The seller’s information in the VDR rarely aligns with the buyer’s due diligence check-list, or request list.

  • Key information is often miscategorized or missing entirely.

  • Traditionally, buyers have had to navigate due diligence using inefficient processes like manually cross-referencing files in the data room against their check-list, and relying on email and phone calls to assign check-list items and check progress, which can lead to wasted time, incomplete analysis or even lost deals.

Our Approach using: Specialists + Technology

Our resident technologists, transaction specialists, project managers and AI (Artificial Intelligence) technology tools (DealVision by Intralinks) work alongside your buy-side team in conducting the due diligence. The AI tool (DealVision by Intralinks) managed along by our team of specialists do the heavy lifting, whilst your team focus on developing and implementing the best strategy and structure following our expertly conducted sourcing and analysis of required files from the due diligence room.

The Specialists

Our Due Diligence specialist team consist of:

  • Our technologists: They set-up our Artificial Intelligence platform using our check-list or a high-breed of your check-list and ours.

  • Our transaction specialists:  They do the heavy lifting of using the AI platform to sift through the files and folders in the data room and generating the red flags and areas of synergy. Note that AI is only as good as the resources utilising it.

  • Our Project Managers: They use same platform to coordinate Q&A. Time-lines and deliverables from across the subject matter experts and other participants in the due diligence. The result is a well synchronised legal due diligence.

The Technology

  • Automated content mapping – Artificial Intelligence (AI)-enabled automated content classification maps the contents in the seller’s VDR to your due diligence check-list – saving the time typically allocated to manual classification and review of this information set.

  • AI-driven gap analysis – Highlights missing information.

  • Activity dashboard – The due diligence process manager now has real-time visibility into the team’s evaluation progress.

  • Consolidated findings and Q&A – Rather than rely on ad hoc methods of collecting feedback and key findings and questions from the deal team, managers now have these updates at their fingertips in a secure, centralized hub 

Conclusion

Knowing that there is an offering in the market specifically designed to streamline the due diligence phase, how comfortable do you feel about continuing to rely on manual buy-side processes that are prone to human error? 

MLS (Managed Legal Services) - The preferred choice for Legal Due Diligence   

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 Before

Currently, buy-side teams spend a significant amount of time trying to understand whether the information the seller has posted in the VDR matches their key requirements. In most cases, a check-list is created, and each member of the due diligence deal team is manually assigned their own item on the check-list. They are tasked with thoroughly examining the details in their assigned area and reporting on whether the information is complete, categorized properly and satisfies their company’s needs.

The next step sees each member of the team cataloguing their findings, usually in Excel, and emailing the project manager about their progress. The manager must trust that the team member has performed their full due diligence and not missed anything in their assigned area. The manager must then gather the same information from each member of the team in the same ad hoc manner, relying on Excel and emails. Several check-ins on progress may be necessary. This process results in a lot of back and forth, overwhelming your in-box and causing version-control issues in Excel.

Upon receiving the findings from each team member, the individual leading the deal must then analyse the results manually and identify areas of vulnerability. 

All the while, the sell-side is anxiously awaiting word from the team to see if the deal can progress.

After

With MLS, our specialist team and AI platform quickly organize deal documents, manage the deal team’s due diligence evaluation efforts, and identify key findings early in the process. The offering introduces several key innovations to help buyers:

l Save time typically allocated to manually classifying and reviewing information with our artificial intelligence-enabled automated content mapping solution. This feature maps the contents in the seller’s VDR to the buyer’s due diligence check-list.

l Gain real-time visibility into the progress of the evaluation team. Managers no longer have to chase down their team members for progress reports.

l Consolidate the deal team’s findings rather than rely on ad hoc and unsecure methods of collecting feedback. Managers now have these updates at their fingertips in a secure, centralized hub.

Our offering has been specifically built for participants on the buy-side of a transaction - designed to match actual work-flow needs and provide transparency into the dealteam’s activity in real time. We are committed to supporting dealmakers everywhere – and on each side of the deal – with the most technologically advanced tools and the best resources to empower valuable, data-driven results.

Hurdles of Parties on the buy-side of a Property Sale Transaction

The hurdles confronted by parties on the buy-side of a property transaction are rather high when conducting a due diligence on the property in question. It's akin to entering an uncharted territory for which there is no map or compass.

 When conducting a due diligence on the property the intention is to identify: 

  1. All parties involved in the property from its inception and who the buyer should be contracting with,

  2. What role the parties played in the property and should any of them still play a role in the proposed transaction with the intended buyer,

  3. The tenure involved in the property and what’s available for the intended buyer to enjoy,

  4. The actual size available for disposal to the buyer,

  5. Interest(s) in the property other than that of the intended seller,

 

Inevitably the aforementioned list is by no way exhaustive, but nonetheless essential, if the buyer is to source all the information needed to make an informed purchase. 

 On the face of it, sourcing all the relevant documents (deeds, contracts, registrations etc…) from the seller ought to be quite straightforward. However, poor document preparation and management has resulted in this process being the most time consuming and tasking. Issued arising include:

  1. Documents are not stored in a central location, 

  2. Documents in hardcopy as opposed to digital requires close physical proximity to the document,

  3. Mixed drafts and originals in a single file consumes time as buyers have to sort through what is relevant from is not, 

  4. Documents are with multiple parties as opposed to one, 

  5. Sellers' reluctance to disclose all relevant information and instead drip feed the supply of documents. 

 

The list of issues goes on and on. The result of this inefficient manner of storing and managing sell-side documents is a buy-side due diligence that consumes an unnecessarily long period of time, with lots of repetitive tasks and incorrect data for the buyer to consume.

 The way forward is quite simple using today's cloud technology. Sellers can securely and cost effectively assemble and store all relevant documents relating to the property in the cloud and give access per demand to buyers to conduct their due diligence. This means digitising all relevant documents relating to the property in question and thereafter uploading it to a secure cloud location which can be accessed using the internet. Buy-side access can be monitored using sign-in and permissioning. This requires all buyers to have their own username and password, and the view of files can be restricted to on-screen view only, or on-screen view and print, or on-screen view, print and download. Using information rights management, documents downloaded can always be deactivated when buyer access is no longer permitted. All this the seller can do at a reasonable cost.

 The aforementioned means all relevant property designated documents can be found in a singular location with a singular custodian. In addition, the seller is also assured of being able to determine who to admit to view the documents and can track when the documents are viewed, opened, printed or downloaded. This reduces the back and forth between seller and buyer and the seller is able to quickly weed out the buyers that are simply fishing from the serious buyers that have serious intent. 

 On the buy-side a due diligence tool such as an AI tool can fast track the process and make it even more efficient especially if a Q&A (Question and Answer) tool is included in the mix. I have found Artificial Intelligence tools that can probe the cloud in which the title documents are stored to do the heavy lifting of identifying what is relevant to the buyer from what is not.