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6 Best Practices for Remote Due Diligence

The circumstances that humanity is facing in 2020 have changed the way we approach life in all areas, and especially in the workplace. As companies had to switch to a remote mode under quarantine, they began to adapt, and as it turned out, it worked out quite well for them. The number of transactions increased markedly, but to make it possible, and even with such success, companies greatly helped by modern technology, but in addition, you have to take other measures, in this article we will tell how to successfully conduct remote due diligence.

Equip your system with the right technology

Virtual data rooms are an indispensable aid during the due diligence process. With their help, companies can invite third-party users to verify the company’s financial and legal records in absolute safety. With robust security features, you can store and share any data within the space without having to meet in person, which is a huge plus these days. Companies also use video conferencing tools such as Zoom or WebEx to build trust, because when millions are involved, both parties want to make sure that they can continue to work together.

Prepare for a long due diligence process

Everyone knows that due diligence is a lengthy process, even when done live. This is because both companies want to be sure of each other’s integrity as well as the value of the transaction being conducted.

Remotely, this process can drag on for an even longer period, so you should prepare for that, mentally and physically. This can happen due to various unforeseen causes, system failures, internet connection problems, and other technological errors.  Also due to the pandemic, buyers will be taking a closer look at the seller’s infrastructure to see how it has changed during this difficult time.

Be aware of security concerns

When any business operations are conducted digitally, security issues become more acute.  Everyone involved in due diligence should be aware of your security policies, and only share sensitive data when necessary. You should invest in programs that focus on protecting sensitive data, like data rooms. These spaces have multiple layers of protection that minimize all risks of data leakage, they use encryption, dual authentication, and detailed access permissions.

Interact with the right people

It’s very important to keep in touch with your potential partners, especially when a face-to-face meeting has never taken place. These days, most M&As are done remotely and it can be very difficult to know who your partner is. To solve this problem you can ask your co-investors, or venture capital firms, they can easily check the reputation of the company. This will prevent the possibility of further surprises and derailing the deal.

Create an agenda for the meeting

The key people in the deal should contact each other as often as possible by video link. In these meetings, they should discuss the progress of the deal as well as the risks that have arisen and how to resolve them. To make meetings more productive, it is a good idea to create agendas that outline, point by point, what needs to be discussed.

Communicate with potential partners more often

Communication is key to the success of any deal, but during a pandemic, this is difficult to do, so this communication should be as responsive as possible. You should be more diligent in your modeling and analysis because we live in a time of economic instability. You have to recognize which indicators are temporary and only related to the pandemic and which problems are deeper.

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