Use case: Data room 2.0: how technology can support M&A deals

On December 1, 2022, the 8th edition of the Rencontres M&A (M&A Meetings) was held in Paris, organized by Option Finance in partnership with Option Droit & Affaires, and sponsored by Closd.

Dedicated to the analysis of major trends, legal developments and growth prospects of the M&A market, this meeting was an opportunity for Grégoire Debit, co-founder and CEO of Closd, alongside Vassili Andricopoulos, Group CIO of Eight Advisory and customer of the solution, to discuss on the theme:Data room 2.0: technology at the service of M&A deals”. 

Corinne Previtali (moderator) (CP): Can you please introduce yourself?

Vassili Andricopoulos (VA): My name is Vassili Andricopoulos, and I am the Group CIO at Eight Advisory, which I joined 3 months ago. Before that, I worked for 12 years at Baker McKenzie. During these two experiences, I was brought to work with many data room users. 

Grégoire Debit (GD): My name is Grégoire Debit, and I am the co-founder and CEO of Closd. As a former M&A lawyer, I was a user of data room solutions before founding Closd, which can be defined as a global transactional player. Our activity consists in facilitating deals between advisors and parties throughout the transaction, by digitizing the entire process. While talking with market players, we quickly identified a need for renewal in the data room sector.

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CP: What is the difference between the electronic data rooms that have arisen on the market since 2006, and the current solutions? In your opinion, what is the state of the art regarding data rooms? 

VA: The historical players in the data room market offer solutions that are certainly very complete, but that are rather heavy, very expensive, and require significant IT resources. On the other hand, there are public document-sharing solutions that everyone knows about, which make it possible to share documents quite easily but are much less secure. 

The challenge for us was to find a data room solution that meets the needs of users and consultants conducting due diligence, and the security requirements of our customers. Our clients are increasingly asking questions about the security of our various technologies. We needed a data room solution that could be used very quickly, securely, at a reasonable price, and was easy to use. We are not a large IT team, so users must be able to operate the data room by themselves. 

With this in mind, I turned to Closd twice: the first time during the pandemic; then recently we called on Closd again at Eight Advisory because we needed a data room solution almost from one week to the next for a client who was very demanding in terms of security, and that could be accessible to 40 people at the same time. We needed a tool that works everywhere, and that allows us to store and access our documents easily and securely. 

Closd is a very flexible solution, that allowed us to have a data room from one week to the next branded with our logo. It provides the essential features of a data room, as well as additional features that simplify our life and allow us to save time: for example, it is possible to invite 45 users at the same time to the data room by simply importing an Excel file. 

GD: Over the past 5 years, during which we have accompanied more than 25,000 transactions, we have had the time to exchange with many market players. We already provide a deal room solution that allows users to digitize, automate, accelerate, and, above all, secure legal processes until the closing and even after. Closd is a French company, compliant with the best standards in terms of security and data sovereignty. 

We have identified a real need in the due diligence segment: our clients and users have told us that they need flexible, user-friendly, and intuitive tools. We are in a market that has existed for about 15 years, but whose main players have not evolved much, and who share the same constraints and difficulties of implementation and use. We have also noticed a need for security: as Vassili said, we very quickly find ourselves using solutions such as Dropbox, Wetransfer, or even unsecured Drives, which can do the trick for a while, but are absolutely not secure enough and represent a significant risk of data loss. Not to mention the fact that these are American tools, which raises questions regadata sovereignty. 

Finally, the price is sometimes excessive, even irrelevant. Data room providers sometimes charge by volume of pages; this model seems a bit outdated in the era of the cloud and unlimited storage. 

Our data room was born from the continuity of what we were already offering since our tool was already used as a data room, but still lacked some essential features to be totally irreproachable in terms of security and confidentiality of exchanges. 

We created this “next generation” data room because it meets the current market standards: modern, fluid, intuitive, and easy to configure; also, it allows users to create projects themselves without the help of an IT team. Our team of former dealmakers supports customers in learning the tool, with the ultimate goal of helping them accelerate their operations.

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CP: In addition to security, data traceability is also a key issue. This traceability is perhaps the strong point of the players who entered the market in 2006-2007. What about Closd? What is your users’ feedback regarding this topic?

GD: Traceability is absolutely essential, and was part of the functionalities we added to the due diligence platform, as well as a Q&A module. Today, our clients can retrieve all the users’ activity logs on the platform themselves: who did what, who consulted what document, etc. We offer a system of access rights that is extremely granular and can be easily set up by the user. The idea is to combine the best of security with the most intuitive and modern interface

VA: One feature that our teams really enjoy is the ability to be notified every time there are new documents uploaded to the data room. You can choose to get notified every time there’s a new document, once a day or once a week. This avoids people having to follow the uploading of documents throughout the day or bothering each party to gather information. 

GD: The big advantage of Closd is obviously that our other solution can be used to go all the way to the closing and even afterward, which is why we define ourselves as a global transaction player. Our clients have to deal with follow-up and traceability issues, particularly in the case of an M&A operation, for which we use a data room solution, then follow up by email or telephone, then use an external solution such as DocuSign, etc. With Closd, we remain in the same workspace, and we can continue to collaborate and track the progress of each task, regardless of the phase of the operation.

CP: Why haven’t the major players switched to a more fluid and less expensive version? 

VA: I think most of these players have a long-standing customer base, who continues to subscribe to their products despite their lack of innovation. The historical data rooms still work well, but they haven’t necessarily evolved with the new technologies or asked themselves about sovereignty either. This is a recurring question for us, which our partners ask me, and in this respect, it is true that Closd’s data being hosted in France is important. 

CP: What is Closd’s pricing model? 

GD: As I said earlier, the storage issue is not the same as it was 15 years ago when it made sense to charge per page. 

Our clients carry out recurring transactional operations, which is why subscription models that allow them to open workspaces in a somewhat unlimited way and not necessarily ask themselves the question of storage volume (within reasonable usage limits) are the most suitable, as on our deal room platform. This makes it possible to better control the costs of the tools in an operation from the beginning. 


CP: What is the structure of your customer base, and who benefits the most from this model?

GD: We address all types of players; it is by discussing with the market players and with the users of our platform that we realized that there was a real need, especially for small and mid-cap companies. The big companies and firms could continue to work with the historical data room providers, but these tools were too much for the smaller players, who didn’t want to use solutions like Dropbox, Drives, etc. The fluidity of the tool allows everyone to easily configure and start a project, regardless of size. 

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CP: Finally, what are the three reasons to use new tools like Closd for professionals (lawyers, M&A advisors, etc.)?

VA: The main reasons are that it is not necessary to have a whole IT team behind it, whether it is for setting up or opening a new data room; the simplicity of use, because the solution is as simple as the tools we know but with the added security, and finally the price

GD: I would also add the tracking of the transaction all the way through, which makes it possible to reassure everyone and to have the same level of information at all times. So I would say flexibility, ease of use, security, and data sovereignty. Again, it’s important to work with European players who host their data in Europe. Closd brings value with a cost in line with the market needs. 

Thank you to Vassili Andricopoulos for agreeing to participate in this testimony, to Corinne Previtali for moderating this meeting, and to Options Finance and Options Droit & Affaires for organizing this event.

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