How Artificial Intelligence can help during the Due Diligence process

for Mergers & Acquisitions

Complimentary eBook offered by

THE CHALLENGE WITH EVERY M&A PROCESS: FINDING RELEVANT INFORMATION

• Inallcomplexcorporatetransactions,partiesneedtofindtheinformationrelevanttothetransaction.

• Therelevantdocumentsmaybestoredinmultipleunknownlocationsandmaycontainimportantinformationthatisnotimmediatelyclear.

• Thesedocumentsneed tobe foundundergreat timepressure.Errorsormisseddocu-mentshavemajorfinancialconsequences.

SO WHERE IS THAT INFORMATION HIDDEN?

• Inallkindofreports;• Incompanyagreementsandemployeecontracts;• Inrental,salesandleasecontracts;• Increditagreements,proofofownershipdocuments,guarantees,propertycollaterals;• Inmaintenancedocumentsandmanyotherrelevantdocuments.

WHAT KINDS OF TRANSACTIONS ARE WE TALKING ABOUT?

• TraditionalM&A;• Realestate;• Refinancing,fundraising,mortgageorsecuritization;• LifeScience&Pharmaceutical;• Complexinfrastructuralprojects;• Complextechnologicalrealestate(i.e.boats,planes);• Otherprocesseslikerespondingtoadditionalinformationrequestsfromregulators;proac-tiveFCPA-research;storingtheVDRforESCROWpurposesandtheabilitytoaccessandsearchinthatVDRafterthedeal.

M&ABuy Side / Sell Side

TAR (Machine Learning & AI)

TAR (Machine Learning & AI)

Blacklining /Auto Redaction

Blacklining /Auto Redaction

TAR (Machine Learning & AI)

ROT (Redundant,Obsolete & Trivial)

Common Reps& Warranties

Privacy Issues /GDPR

Litigation

Data Cleansing

Red FlagIndication

IP & Privacy Protection

ROT (Redundant,Obsolete & Trivial)

Seperation

Contract Discovery& Analysis

Due Dilligence

Data RoomPreparation

Pre-MergerNotification &

Second Request

Verification of Reps

& Warranties

Integration

Post-Transaction

Pre-Transaction

THERE ARE MANY ASPECTS TO A M&A PROCESS

YOU CAN NO LONGER DO THIS MANUALLY

• Toomuchdata;• Youdonotknowwhatyoufindandwhatyoumiss;• Toomany(geographicallydispersed)sources;• Ittakestoolong;• Pronetoerrors;• Boringanddemotivatingwork.

WHEN JUST SEARCHING IS NO LONGER ENOUGH ...

• Youdonotknowexactlywhattolookfor.• Itdoesnotmatterhowgoodyourqueryis;yougettoomanyhitsanyway.• Thereistoomuchdatathatcannotbesearchedusingtextualqueries.• Therearelanguagesyoudonotspeak.• Itisnotalwaysclearwhatisorwhatisnotinapotentialdataroom.• Misspellingsandvariations,non-Englishnamesandslangcauseadditionalproblems.

... ARTIFICIAL INTELLIGENCE COMES TO THE RESCUE

HOW CAN AI HELP IN M&A?

• Intelligentsearch• Intelligentanalysisofdocumentcontent• Identificationandextractionofrelevantin-formation

• Classificationofinformation• Learning and storage of knowledge ofcontractclausesandtypicalduediligenceproblems(MachineLearning)

• Automatictranslation• Automatic identification and redaction ofsensitiveandpersonaldata.

The M&A due diligenceprocess

AUTOMATICALLY COLLECT INFORMATION FROM ITS ORIGINAL LOCATION

SHIFT AND FILTER AGREEMENTS FROM NON-AGREEMENTS

AUTOMATICALLY ANALYZE AND CLASSIFY THE CONTENT OF SPECIFIC CONTRACTUAL DOCUMENTS

ROI - CLASSIFICATION OF DOCUMENTS

Manual classification of 15 categories: 1,500 to 2,000 hours Multiple reviewers over a longer period of time = less consistent result

TAR-supported classification including manual check: 80 hoursOne reviewer for a short period of time = consistent result

“We used ZyLAB for a project where we needed to sell part of a large bank, including a port-folio of 1000+ loans. And we experienced it first hand: sometimes machines are faster, more accurate and more cost-effective than humans.”

AUTOMATIC DOCUMENT ANALYSIS – WHAT DOES IT SAY?

INTEGRATED MACHINE TRANSLATION

AUTOMATICALLY DETECT POTENTIAL DEAL-BREAKERS AND PROBLEMS (1)

AUTOMATICALLY DETECT POTENTIAL DEAL-BREAKERS AND PROBLEMS (2)

AUTOMATICALLY CLASSIFY DOCUMENTS IN VDR CATEGORIES

COMPLETING YOUR FILES

Acompletefilecontains:

• CreditAgreement• MortgageDeed• LeaseAgreement• ValuationReport

Missing:CreditAgreement

REPORTING AND CONTRACT SUMMARY REPORTS (1)

REPORTING AND CONTRACT SUMMARY REPORTS (2)

TECHNOLOGY ASSISTED REVIEW (TAR) (1)

THEGOALOFTAR

• Automaticdocumentclassificationintoresponsiveandnon-responsivesets.• Recallmaximization:find80%ofallresponsivedocumentsquickly.• Savetremendouslyoncostoflegalreview.• Find relevant documents semi-automaticallywithout depending on the search-skills ofend-users.

• Findwithoutknowingexactlywhatyouarelookingfor.• Automaticallyclassifydocumentsintoconceptualcategories.

TECHNOLOGY ASSISTED REVIEW (TAR) (2)

• Startwithasimplefull-textquery

• ContinuousActiveLearning(CAL):

• ZyLABTARaccomplishesaveryhighprecision&recallresult

TrainZyLABTARbyreviewinganumberofdocuments:Easy&Fast!

ZYLAB TAR: “DEFENSIBILITY” ACCORDING TO US STANDARDS

REDACTION: PROTECTING IP, PII AND OTHER SENSITIVE INFORMATION

• PrivacyEthnicbackground,healthinformation,religion,politicalpreference, andotherpersonalinformation.

• Personal Identifiable Information (PII)Name,addresses,dataofbirth,photos,phonenumbers,etc.

• Commercially sensitive information*Privileged* Tradesecrets* IP

REDACTION: PROTECTING IP

REDACTION: PROTECTING PII (BULK REDACTION)

ROI - REDACTION

Manual digital redaction (blacklining): 1,800 hours * Multiple reviewers over a longer period of time = less consistent* Long turnaround time* High costs

Automated redaction including 100% check: 700 hours

Automated redaction including random check on 100 documents (~3%): 120 hours* Short turnaround time* Consistent and reproducible* Economically feasible

“Redaction is a critical aspect in our work. It’s time consuming and errors can have serious consequences. Using the automated bulk redaction functionality in the ZyLAB software al-lows us to deliver high quality at a much faster pace.”

-YasminaBenDaoued,projectmanagerLegadex-

BENEFITS FOR CORPORATE M&A - SELLING SIDE

PRE-TRANSACTION• Minimizeliabilitiesandrisksbyincreasingtheaccuracyoftheextractedinformation;pre-venthumanerrorandotherpotentiallycostlymistakeswhenpreparingthedataforavir-tualdataroomorwhenimplementingavendorduediligence.

• Keepcontroloverwhatgoesintothevirtualdataroom,addressproblemsearlyintheproc-ess.

• Protectintellectualproperty,confidentialinformationorprivacysensitiveinformationby(auto)redactionandtheuseofpseudonyms,butkeeptheflexibilitytodiscloseinforma-tioninotherphasesoftheM&Aprocess.

POST-TRANSACTION• KeepasearchableandfullyanalyzedcopyoftheVirtualDataRoomforreferenceincaseoffuturequestionsordisputes.

BENEFITS FOR CORPORATE M&A - BUYING SIDE

PRE-TRANSACTION• Supportduediligenceprocesswithadvancedanalyticsandsearchintheeventthata(stra-tegic)buyercandownloaddatafromthevirtualdataroom.

• Automaticallycreatelargepartsofthecontractsummaryandduediligencereports.• Minimizeliabilitiesandrisksbyincreasingtheaccuracyoftheextractedinformation;preventhumanerrorandotherpotentiallycostlymistakes.

• Achievea fasterandmorecosteffectiveproactiveaudit related topotentialviolationsofFCPA,exportcontrolorifrespondingtoadditionalregulatoryrequestswhenseekingpermis-siontomerge.

• Quicklyandeasily,preparedocumentsforinitialfilingsandtoanswersecondrequestsre-latedtoobtainingpermissiontomergefromregulators.

POST-TRANSACTION• Improvetheoverallpost-transactionintegrationprocessbytheunsurpassedaccessofinfor-mationandtheaccuracyofallextractedinformation.

• Overallimprovementoftheprocessfortheverificationofrepresentationsandwarrantiesbyalsoincludingotherdata.

• Supportfordatamigrationprocessessupportingtheoverallintegrationprocess.

BENEFITS FOR LAW FIRMS

• Quicklyidentifyexactlywhererelevantdocumentsarelocatedandwhatcontenttheycon-tain.Thisenablesyouandyourclienttoclosethedealfaster,withlessriskandmorerev-enue.

• Improveaccuracyandefficientlyinateamwithyourcolleaguesandyourclient;speeduptheprocess,increaseclientvalueandstandoutfromthecompetition.

• Ensureyouemploythemostefficientwaytorespondtoregulatoryrequestswhenyourcli-entseekspermissiontomergeorhastoimplementaproactiveFCPAinvestigation.

• Keepyourjuniorlawyershappybysparingthemboring,highlydemotivatingmanualreviewandredactionwork.

ZYLAB DELIVERY MODELS & LICENSES

Litigation

DisputeResolution

RegulatoryRequests

InternalInvestigations

eDiscovery

IntellectualProperty

CorporateLaw

CommercialLaw

Competition

FinancialMarkets

Environmental

FraudInvestigations

FraudDetection

On-premises

SaaS / Azure / Private Cloud

Licenses

* Perpetual* Volume based* Project* Subscription* # of Reviewers

ZyLAB OneintegratedplatformformorethanjustM&A

ZYLAB COMPETITIVE COMPARISON

M&A AI

eDiscovery

• Advancedfull-textsearch• Naturallanguageprocessing• Entitydetectionandextraction• Paragraphdetectionandextrac-

tion• ContractSummaryReports• Red-flagdetection• Easydetectionofomissionsand

errors• ProductiontopopularVDR

formats

• Auto-redaction• Collaborationtools• Workdistributiontools• Advancedproduction• Importandexportfromandto

otherindustrystandardeDiscov-eryformats

• Specialsupportforanti-trust,bribery,fraud,internationallitigationandothereDiscoveryusecases

• Machinetranslation• Audiosearch• Machinelearning• Topicmodeling• Hierarchicalclustering• Text-mining• Advancedfull-textsearch• Datanormalization• Datavisualizations

• LegalHold• Directcollectionfromfile

shares,email(O365),Share-Pointandmanymore

• Deepprocessing(unpackPST,NSF,ZIP,objectsinMS-Officedocumentsandothercom-poundformats)

• AutomaticOCRof(embedded)bitmapsandnon-searchablePDFs

• Userfriendlyreviewincludingseveralreviewaccelerators

ZyLAB ONE eDiscovery

ZyLABONE eDiscovery uses the latest Artificial Intelligence and Data SciencetoolstoacceleratetruthfindingmissionsalongthetypicaldimensionsWho,When,Where,Why,What,How,andHowMuch.ZyLABispositionedas“leader”inGartner’slatestMagicQuadrantforeDiscoverySoftware,ranked#1forcompleteEDRMeDiscoveryinGartner’s“CriticalCapabili-tiesforE-DiscoverySoftware”reportandhasreceivednumerousother industryaccoladesoverthelastthreedecades.