It’s not that long ago since using a data room in a transaction was synonymous with a physical room filled with files and folders. Today most due diligences are performed in the secure environment of a Virtual Data Room.
If you are performing a due diligence in a data room, or are planning to, you may already have heard about Clean Rooms. But, do you know what we are using them for? And whether you need one?
A Clean Room within the data room means full control for the seller team at the same time as the buyer side has everything they need to make informed decisions.
What is a Clean Room?
It is basically a data room within the data room, which is used to share information with highly restricted access.
Why would you need a Clean Room when the data room is already secure?
In due diligence, there could be two main reasons why sharing your information with potential buyers in the secure setting of the data room is not sufficient:
- You may have trade secrets that you are simply not willing to share until the deal is closed
- Antitrust laws prevent you from sharing information which could potentially lead to price fixing or unwanted transparency
The general rule is that the parties should be able to carry on as before if a transaction does not take place as planned.
Who can access the Clean Room?
The Clean Room is typically accessed only by the data room`s administrator and a few of your buyer’s advisors – aka the Clean Team.
How is the information in the Clean Room useful?
After reviewing the information in the Clean Room, the Clean Team presents their client with an aggregated report which could “make or break” the transaction. With the knowledge of both the target and the potential buyers, the Clean Team can make a report that will help the bidder make informed decisions without knowing all the details.
How to get started?
Ask your data room provider! Admincontrol is a leading provider of data rooms for due diligence. Contact us to learn more about our data rooms, or visit our webshop to get started today.