The healthcare and life sciences industries need tools that ensure transaction success. More even than in other sectors, the speed and efficiency at which the due diligence process is carried out is critical in healthcare and life sciences, as any delays or disruptions could mean the prevention of the delivery of important therapies and treatments.
Unfortunately, the due diligence process is often marked with bottlenecks, due to the slow or inefficient sharing of documents. Without proper sign-off, the approval of a transaction can slow down, or not proceed at all. However, a cloud-hosted, document-sharing platform is not enough. The right tools with the right features are necessary to not only support the work of the professionals engaged in these transactions but also to add incremental value into the entire process.
Whether used for fundraising, partnerships or collaborations, mergers and acquisitions (M&A), or simply as a repository for post-transaction integration efforts, healthcare and life sciences companies greatly benefit from the use of a virtual data room (VDR) from CapLinked.
The Problems with Traditional Cloud-Based File Sharing
Regular cloud-storage platforms are insufficient to handle the high-volume access and security needs of investors, company owners, consultants, scientists, clinicians, government regulators and others involved in a healthcare or life sciences M&A transaction.
There are several challenges that broad, general-use cloud-storage platforms face including:
- Missing access controls
- Poor document management
- Little to no activity tracking
- Excessive complexity
- No annotation and Q&A
- Non-compliance (notably HIPAA)
Secure File Sharing for Healthcare and Life Sciences Companies
There are innumerable benefits for the stakeholders in a healthcare and life sciences transaction when considering a VDR for the due diligence process.
A VDR is the most cost-efficient option for conducting due diligence. The document-management solution is cloud-based and delivered as a service, as well as delivered as needed. Organizations pay subscriptions based on the number of seat licenses, and if custom solutions are needed, CapLinked can work on a set of options and features that best meets the needs of the team.
Cost-control is essential in healthcare and life sciences transactions. With these industries already under scrutiny by both regulators and the public, the opportunity to minimize operating costs while streamlining transaction efforts is critical.
Virtual deal rooms meet the strictest of standards for security and compliance. Stakeholders in a healthcare and life sciences transaction often work for organizations with varying security policies in place. For example, the security protocols of an investment bank differ from those of a government regulator, and certainly from those of a university science lab.
However, with a VDR in place, transaction participants need not worry about the security settings of their own devices, browsers, operating systems or applications — the VDR takes care of all this, for added peace of mind.
Standards for virtual data rooms include the following:
- SOC 1/SSAE 16/ISAE 3402
- SOC 2 Type II
- FISMA, DIACAP and FedRAMP
- DOD CSM Levels 1-5
Accessibility and Built-In IT
Documents are available online via any device, platform or operating system.
The VDR is delivered as a service — via a web browser and a secure login, often with multifactor authentication. As such, reviewers usually do not need to purchase new devices, download special software, upgrade their systems to access the documents uploaded to the VDR, or even consult with their own in-house IT department. With a VDR, it’s “built-in” IT.
How Healthcare and Life Sciences Companies Use Virtual Data Rooms for Due Diligence
No two healthcare and life sciences transactions are identical. Whether an M&A, IPO, private equity or venture capital investment, partnership or collaboration, divestiture, bankruptcy, or recapitalization, the due diligence process can become complex.
Secure Document Sharing
All participants involved in a transaction can rest assured that their documents, once uploaded to the VDR, remain secure. Reviewers are also aware that their access to other documents is also secure.
The administrator of the VDR is able to upload, download, annotate, grant and revoke access rights, change settings (e.g., download), manage users and oversee other digital administrative features through document management. The documents can be nearly any format, which is important in healthcare and life sciences transactions because in addition to financials, there might also be diagrams, drawings and scientific data that need to be reviewed.
Company principals, bankers, valuation professionals and others can present a company’s financials securely to several potential investors and their advisers who are potentially interested in providing capital. Access can be provided to both groups and individuals.
Management of the funds received, including bank and treasury statements and proof of transactions, can be facilitated by the VDR.
Any and all accounting statements, in most file formats (e.g., Excel, PDF), can be uploaded and shared for evaluation.
Investment bankers or those overseeing the transaction can host any and all documents necessary, and securely manage access for both groups and individuals. As certain advisers complete their review, or as investors pass, the VDR can revoke access and ensure the security and privacy of documents.
Due Diligence: Sell-Side and Buy-Side
Both companies involved, in addition to their bankers, lawyers, accountants and other advisers, can push any and all documents necessary for a transaction to take place.
Secure File Sharing That Is HIPAA Compliant
Before and after a transaction has taken place, a VDR can provide ongoing support by serving as an always-on, always-available repository of documents that are secure and HIPAA-compliant.
Everything You Need to Keep Your Files Secure
The success of a healthcare and life sciences transaction relies on a robust VDR, and there are particular must-have features for a VDR.
As with editing documents directly in the VDR platform without needing to download and re-upload, the ability to ask and answer questions and make comments or annotations right in the documents is critical to maintaining speed and flow during the due diligence process.
Reviewers need to stay focused on the documents at hand. Leaving the platform to communicate via email or a channel messaging system (like Slack) is not only time-consuming but also risky, as sensitive conversations shared via an unsecured connection are most likely not HIPAA-compliant but could also expose details about the transaction to outsiders.
Customizable Permissions for User Groups
To facilitate the authorization process, a VDR should include the ability for administrators to grant permissions not only at the individual level but also at the group level. This can be beneficial for larger teams with outside consultants who only need access to certain documents.
Enterprise-level security, including digital rights management, encryption and watermarking of documents, is crucial to maintaining the confidentiality and integrity of the documents being shared and reviewed within the VDR.
A VDR should enable administrators to track all actions and changes made within the workspace, both at the individual and group level. These activities might include document views, downloads, uploads, permission changes and pages viewed.
This is more than a human security check and is more like an efficiency booster, as the administrator can determine who is doing what they need to do and who isn’t. If certain documents seem to keep people stuck and cause delays, perhaps there is an issue with legibility. As such, the workspace administrator can uncover this irregularity and notify the appropriate document owner.
Document Control and Management
Documents can often number in the thousands of pages, so the VDR must be able to accommodate a high volume of documents.
Further, in-app edits are critical. The platform must enable reviewers to make edits right in the platform, rather than through downloading the document, opening it in another program (i.e., Word or Excel), making the changes, and then re-uploading them to the VDR. Besides being inefficient, such document exits pose a security risk, even for the best-intentioned reviewers.
CapLinked Due Diligence for Healthcare and Life Science M&As
CapLinked knows virtual data rooms. We have facilitated the due diligence processes for countless transactions in the healthcare and life sciences industries. Companies involved include pharmaceuticals, device manufacturers, biotech developers, hospitals and clinics, pharmacy chains, telemedicine providers and more.
While basic enterprise document sharing is familiar to most business professionals, the advanced features of a VDR might be unfamiliar to many transaction participants, especially those working in hospitals, laboratories and other scientific and clinical settings.
Luckily, CapLinked’s solutions are simple and ready out of the box. Minimal training is needed, if any, and a VDR can be launched in less than a day so that a transaction can proceed without interruption. By leveraging a cost-effective, scalable virtual deal room solution, organizations and their advisers can perform due diligence with speed and accuracy, ensuring that transactions close on time. Try CapLinked today!