Focus on… The preparation of a data room in an international sales process

In 2022, we have sold as Kontron Group significant parts of the IT Services Business. Now Kontron follows its growth strategy with a high focus on its sales related to software and hardware solutions rather than on IT services. The transaction volume amounts up to approx. EUR 400 m and covers more than 10 companies in different jurisdictions.

With such an international footprint, the legal department’s structuring of a transaction in the most efficient way is of enormous importance. From the sale side, the preparation phase means preparing a sufficient data room and sales prospects for all companies in scope. Here are my top five advice, which make international transactions smoother:

(I) If the transaction is on an international basis, choose wisely a law firm with an international footprint. Make sure that the lead person is available for the whole transaction phase. You depend on local law firms and a good main lead, which helps you to review and summarise the information provided.

(ii) Motivate your local stakeholders and give them essential transparency on deadlines and your expectations. Communicate planned requests at the earliest possible stage. Give them a chance to prepare resources. By setting deadlines for their responses, remember their daily business. Understand that operational business might cause some requests for extensions of deadlines. The happier your companies are with the whole process, the happier they will make you with sufficient information provided in time.

(iii) If you request documents from your companies, ensure that you make your request detailed and do not miss giving enough guidance. The better your request is, the fewer questions you will have to answer from your companies or from your potential buyer(s). Moreover, if there is less room for interpretation, the all-over-picture of the information quality provided will show a comparable picture of all companies in scope.

(iv) Respect competition and privacy laws. Do plan enough time for the blackening process. Since international sales often require documents in the local language, the blackening must be either made by the local law firms, or by respective companies.

(v) Plan time to fix material issues in respective companies. Due to a review of the information provided, some topics are not as you expected. Plan time to solve material issues and replace the documents which have been updated.

You will notice that the better your prior work is at preparing a complete and sufficient data room, the fewer questions you will get from potential buyer(s). If you have prepared the information well, in the later stage of negotiations, you will be more flexible and confident in giving representations and warranties to the buyer. Everything that is adequately disclosed minimises your liability risks and makes you more comfortable with the whole transaction. Good preparation is always half the battle.