Online Digits Were Key to Big Sale

A Data Room With No Walls

Converting folks to a whole new way of doing business in an industry historically reluctant to embrace change is always a challenge, to say the least. Early adopters of new technology, however, often can reap big rewards while blazing the trail for their more-cautious colleagues.

Recognition and acceptance of the exceptional value the Internet can bring to the table is a prime example.

Such was the case when the owners of Houston-based North Central Oil made a strategic decision to sell the company. They enlisted the help of an investment banker, which recommended they bring IndigoPool.com onboard to put together a digital data room to facilitate the endeavor.

This was a major coup for the then-fledgling B2B Net marketplace, which had not yet celebrated its first birthday.

They hit the ground running.

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Converting folks to a whole new way of doing business in an industry historically reluctant to embrace change is always a challenge, to say the least. Early adopters of new technology, however, often can reap big rewards while blazing the trail for their more-cautious colleagues.

Recognition and acceptance of the exceptional value the Internet can bring to the table is a prime example.

Such was the case when the owners of Houston-based North Central Oil made a strategic decision to sell the company. They enlisted the help of an investment banker, which recommended they bring IndigoPool.com onboard to put together a digital data room to facilitate the endeavor.

This was a major coup for the then-fledgling B2B Net marketplace, which had not yet celebrated its first birthday.

They hit the ground running.

"We didn't think they could do it in time, but they did" said Bill Deupree, vice president of Legend Natural Gas and former vice president of North Central Oil. "It only took them three to four weeks to get all the data digitized."

The package was comprised of properties in South Texas, South Louisiana and the Rocky Mountains. A purchase agreement was reached after the data room was open for roughly a month, and the $750 million sale of the company to Pogo was consummated early last year.

Not surprisingly, an asset offering of this magnitude was an invitation-only affair. And it was a two-step process:

➤ Potential bidders first were required to submit a preliminary bid based on information provided in a limited data book, which they were allowed to peruse after signing a confidentiality agreement.

They were given one day in the office to review these data.

➤ Once the prospective bidders were high-graded to the company's satisfaction, the selected participants from the original group were separated into smaller groups and invited into the electronic data room.

This "room" was organized exactly the same as the physical data room, according to Deupree.

"The beauty of IndigoPool and where it added value," he said, "was it gave the prospective bidders access to all that was in the physical data room over the Internet in their own offices. And it saved us from making hundreds of copies of every piece of paper we had — and also saved us from being hounded a lot more by people trying to get data."

Besides the online repository, the data were copied to a CD, which meant the entire data room was also on a disc, allowing even more convenience for potential buyers during the evaluation process.

"The other nice thing with the digital data room, especially the online version, is the ability to supplement and add new information as it's available is easy and fair, and all get it at the same time," Deupree said.

"The availability and access to the data online definitely enhanced the value we got for the company, in my opinion," he added.

The process dovetailed with his belief in the concept of "more is better" when it comes to data, i.e., provided you have a solid product, then the more data you hand out, the more it should reduce risk and uncertainty, leading to a better price for the asset.

In this case, the proof was in the payoff.

There would be no hesitation over a repeat performance.

"If I were to do it again, I'd either go to IndigoPool or someone like them," Deupree said. "The deals I look at, I like it when they have online data rooms."

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