Virtual data room Q&A: Key features and management tips

Effective communication between parties is crucial during mergers and acquisitions (M&A), as it can dramatically impact the outcome of the deal — including the deal’s value.

Ineffective communication can lead to deal’s delay or even failure. For instance, over the past two years, delays have plagued 30% of major acquisitions. 

Using a virtual data room (VDR)  in your deal-making process can significantly improve the quality of communication between deal participants. A key feature is the VDR’s Q&A functionality, which facilitates efficient and secure collaboration.

This article explains the Q&A process in a virtual data room, describes the main features of this tool, and offers practical tips for Q&A management during M&A transactions.

What is a data room Q&A process?

The Q&A process in a virtual data room stands for the system of posting questions and answers regarding a project or deal. Simply put, it’s a fast and efficient way for VDR users to collaborate on documents.

Q&A data room features are especially useful during complex financial transactions such as M&A, and, in particular, the due diligence process. It’s a structured way for potential buyers, investors, or other stakeholders to ask questions and clarify information about a transaction. 

The purpose of the virtual data room Q&A process is to ensure that both the buyer and seller are clear about any important documents, operational details, or financial information related to the deal. 

Source: Ideals Help Center

Key features of Ideals’ VDR Q&A system

Ideals virtual data room ensures a smooth process of submitting and answering questions with the help of these advanced Q&A features:

• Q&A roles
  During the Q&A process setup, a project manager or VDR administrator can choose what roles to add to the Q&A workflow based on their project needs. The roles offered by Ideals include question drafter, question submitter, answer coordinator, expert, and answer approver. A variety of roles ensures smooth question routing, with questions reaching the right people with answers being expert and on-point.
• Question limits
  Deal teams typically have many questions to clarify and discuss, which can over-burden the whole Q&A process. To avoid that, Ideals allows users to limit the number of questions a bidder/investor side can ask. You can set the question limit for a day, week, month, or all time. This way, the sell side can save time managing questions and the buy side can focus on important items.
• Question follow-ups
  Buyers and sellers can have a clear back-and-forth discussion of a single question with follow-ups. With this feature, users can avoid submitting questions separately. Instead, they just add new items to the existing question thread, helping the discussion stay on track and keeping the relevant subject-matter experts (SMEs) involved.
• Question categorization
  Project managers or admins can create question categories during the Q&A setup. These can relate to Legal, Finance, Insurance, Tax, Accounting, HR, and other categories. When categorization is enabled, users can then choose a relevant category for submitted questions. This helps route questions to appropriate parties for an answer.
• Question assignments
  When users submit questions and label them with a category, questions can be automatically assigned to relevant SMEs. Expert assignment ensures that parties with appropriate knowledge and experience answer questions, which, in turn, guarantees a comprehensive answer. For instance, when labeling a question with “Legal”, users make sure they receive answers from legal professionals.
• FAQ
  Instead of repeatedly answering similar questions from different teams, you can create an FAQ instead. This provides answers to the most commonly asked questions and can save you a lot of time.
• Excel import and export
  The Ideals data room provider allows for exporting the Q&A discussion to an Excel spreadsheet. This can help to further analyze questions or share them with colleagues who do not participate in the Q&A workflow. You can then add all the answers to the Excel file and import them to the virtual data room.
• Email notifications
  Participants of the Q&A workflow can receive email notifications about any new activity in the Q&A section that’s relevant to them. There’s an option to receive instant notifications as soon as the activity occurs or a daily digest that summarizes all actions for 24 hours.
• Question attachments
  You can attach documents to questions or answers with Ideals. This ensures an effective Q&A interaction between deal sides and limits the opportunity for misunderstanding. Just upload files from your computer or add a link to an existing file in a virtual data room when submitting a question or answer.

How to customize Q&A workflows with Ideals VDR

You can easily customize Q&A in the Ideals VDR based on your project needs.

Here’s what you can customize: 

• Q&A roles
  You can set different Q&A roles based on your project size or the number of people involved in the Q&A. For instance, you might skip question submitter or answer approver roles, so that drafted questions are routed straight to the answer coordinator and then on to the expert.
• Q&A workflow
  Based on the set roles, you create custom Q&A workflows with different user permissions and SME assignments. Additionally, you can customize question limitations, so that the Q&A workflow doesn’t become overburdened.
• Question categories
  You can add, remove, and adjust question categories throughout the Q&A workflow based on the document categories or question nature.
• Information visibility
  You can adjust settings for the sort of information that is visible to users in notifications, such as showing team names or question details in email alerts. 

Automating the Q&A process

When deals were managed using a traditional data room, the communication process between parties was not as smooth as it is with virtual data rooms now. 

All questions about documents would be generally gathered in an Excel spreadsheet and then transferred to the appropriate parties to answer. Another roadblock would be the need to route questions to different people, after identifying the appropriate SMEs. Then you would again need to gather all the answers in one document and send them to the people who had asked the questions.

This is a clumsy process that’s time-consuming and prone to human error.

Virtual data rooms not only provide a secure platform to share sensitive information with other parties but also ensure smooth Q&A interactions thanks to automation capabilities. With VDRs, you can automate Q&A workflows and reduce human error.

This is how Q&A workflows can be automated with Ideals:

• Questions assignment
  You can easily manage questions submitted in a VDR with automatic questions assignment. Upon adding categories to the Q&A sections and setting the Q&A roles, questions are automatically assigned to experts responsible for answers in a certain category.
• Notifications
  Project admins can enable users to receive automatic notifications every time actions related to them are performed in the Q&A section.
• Question indexing
  All the questions submitted are automatically indexed based on the settings you choose: sequential numbering or random ID.

Best practices for Q&A management in M&A

During M&A, the due diligence Q&A process can become overwhelming due to the large number of questions that bidders/investors might have. This can significantly impact the deal’s flow and extend deadlines. For instance, for deals of $2 billion or more, the period from signing to closing stretched by 11% from 2018 to 2022.

Follow these Q&A best practices for managing bidders’ questions smoothly and efficiently:

• Define clear Q&A roles
  Assign roles for managing Q&A, such as question submitters, answer coordinators, or experts. Clear role definitions ensure that subject-matter experts answer questions relevant to their expertise, increasing response accuracy.
• Categorize questions
  Use categories (such as Financial, Legal, or Operational) to organize questions by topic. This helps filter questions quickly so that they’re routed to the appropriate experts.
• Create an FAQ section
  To avoid answering the same questions from different teams again and again, create an FAQ section with answers to the most common queries. This can significantly help when handling large Q&A volumes.
• Set question limitations
  To avoid getting overburdened with the number of questions, set limitations. For instance, you can set the limit to only 50 questions a week for a certain team.

Tracking and auditing Q&A activity

Project managers or Q&A coordinators can track Q&A activity in the Q&A dashboard. 

In this section, you can see all submitted questions, monitor their status — whether unanswered, answered, assigned to an expert, or requiring extra action — and track their progress to make sure nothing is overlooked.

Source: Ideals Q&A

Additionally, you can get reports of all the actions within the Q&A section via email. These reports can be sent instantly after each action takes place or compiled into a convenient daily digest.

Key takeaways

• Data room Q&A functionality improves the collaboration process between deal sides by posting questions and answers regarding a project or deal.
• Key Q&A features, such as role assignments, question limits, threading, categorization, and automated question assignment, streamline the Q&A process, ensuring accurate and expert responses.
• Customizable Q&A workflows, automated notifications, and FAQ sections help manage large volumes of questions during a project or deal.

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