Author: Sunny

Security, Confidentiality and Compliance and were forefront in our minds when developing Reccy. According to IBM’s Cost of a Data Breach Report 2024, the global average cost of a data breach in 2024 was $4.88 million (£375m) meaning that securing hosted data is vital. It’s also vital that we are compliant with rules and regulations on data.

At Reccy we use the following safeguards to protect the data of our customers:

• Encryption: Data is encrypted, protecting it from unauthorized access.
• Access Controls: access permissions ensure that only authorized individuals can view data
• Deleting Data: when you close a room, it is permanently deleted from our servers
• No Training: we do not user your data to train Reccy or any other AI
• Privacy: We cannot see your data, only you and people you have authorised have access to your data rooms

IBM’s 2024 report also has an upside for their research: using secure AI solutions can save a company an average of $2.22 million (£171m). Reccy puts your company on the path to making significant cost and time savings.

In high-stakes deals, overlooking a single risky clause can have significant consequences. According to Bain and Company, almost 60% of executives attributed deal failure to poor due diligence that did not identify critical issues.

If you have ever been tasked with reviewing thousands of documents in a VDR for an acquisition or merger, you know it can be overwhelming. How do you make sense of an ocean of data?

With Reccy it is now possible to build a strong overview within minutes and hours rather than waiting weeks. This article will go over the different kinds of AI, machine learning and data analysis that we can use to sort and understand your data.

Large Language Models (LLM)

Large Language Models can read and summarize vast amounts of information faster than any human ever could. But there is a lack of transparency. They will tend to give you answers without showing their work. In due diligence, where every detail matters, that is not good. You need to know why a certain contract clause is risky or how a financial discrepancy can be proven.

Provide your Sources!

Reccy solves this problem by providing sources in your data for any point made – so you can immediately understand why conclusions were made. These are available to download (if you have permissions by your company’s Reccy Admin) so you can focus on the detail you need.

Enter Machine Learning Sidekicks

Traditional Machine Learning (ML) models are also very powerful. Unlike their enigmatic LLM counterparts, ML models are more transparent. They can tell you exactly how they reached a conclusion. For example, an ML model might highlight that a contract has an unusual termination clause because it deviates from industry standards by including specific conditions.

By combining the language prowess of LLMs with the clarity of ML models, we can create a system that not only processes vast amounts of data but also explains its findings clearly.

Why This Combination Matters

• Efficiency: LLMs handle the heavy lifting by processing and summarizing large volumes of text quickly.
• Transparency: ML models provide clear explanations for each flagged item, boosting confidence in the findings.
• Risk Mitigation: Understanding the why behind each risk allows teams to make informed decisions and negotiate better terms.

The Bigger Picture

By using Reccy and leveraging technology that is both powerful and transparent, businesses can reduce the risk of missing key information when looking through data rooms.

My wife and I have a fundamental disagreement: she likes movies based on real-life, where as I become disappointed without elements like Aliens, time-travel, or impossibly choreographed car chases.

One movie that I like, based in the future of course, is the Scifi classic “I-Robot”. Will Smith (in 2004 he was still a movie-star rather than a bully) plays Detective Del Spooner and he’s interviewing Dr. Lanning who is now a pre-programmed simulation. He has to figure out clues that the now-dead Lanning has sent him. If he asks the wrong questions, the simululation replies: 

“I’m sorry, my responses are limited. You must ask the right questions”

Sometimes ChatGPT is like this! When it gets things right, it is amazing, but frequently it frustratingly misses the point of your question.

Reccy is not like this, we are very focused on the task at hand: providing clarity on Data Rooms. What can we learn about the company from the information provided? Typically it takes around 30 minutes to provide a detailed analysis of a data room – something that would take a person weeks of work. Our analysis covers the key information you need:

Reccy does extensive analysis to help ensure you do not have to all the detective work that Will Smith had to go through in the movie!

Picture this: Teams of bleary-eyed analysts and lawyers, fueled by endless coffee, spending weeks digging through contracts, financial statements, and that one mysterious folder labeled “Miscellaneous_Final_FINAL_v3_really_final.” They’re searching for red flags, hidden gems, and that one crucial detail buried on page 394 of a supplier agreement from 2019.

Reading through a gigabyte worth of documents is nobody’s idea of fun. Data rooms have evolved from rooms filled with paper to Virtual Data Rooms (VDR) but the time it takes to go through the information has not been reduced. Now with Reccy, we can move analysis of Data Rooms on to the next stage.

863% Faster

Our estimate is that the speed increase of using Reccy to analyse your VDR results is about 863% over human analysis. We usually have detailed overview of the data ready within 30 minutes (depending on the size of the VDR). This doesn’t mean you can rely completely on Reccy and not have to look at the documents, but it does mean you have saved a lot of time and analysis that would previously have been necessary just to understand what is in the VDR.

Reccy Insights

Reccy uses 60 data points to create a comprehensive analysis. These are the Reccy Insights. These are covered by these key category headings:

Summary & Background
Owners & Managers
Commercial
Finance & Accounting
Tax
Cultural
Legal
Technology
People
Property
Policies
Risk

Benefits of Reccy Insights

Some of the benefits of Reccy’s analysis:

• Point out missing documents or gaps in information
• Spot patterns across documents
• Flag inconsistencies in contract terms
• Identify potential regulatory compliance issues
• Extract key financial metrics and trends
• Highlight unusual terms or conditions

Why This Matters

Think about typical due diligence failure points:

• Missing a crucial liability buried in subsidiary documents
• Overlooking inconsistent terms across multiple contracts
• Not catching regulatory compliance issues
• Failing to spot patterns in historical data

Reccy gives your due diligence team superpowers, making their work easier, faster and saving you money.

Evolve your Due Diligence with Reccy

In a world where missing a single crucial detail can cost millions, using Reccy to analyze your data room is a great decision. The best deals are the ones where you know exactly what you’re getting into. With Reccy, you’re not just seeing the tip of the iceberg – you’re scanning the whole thing, underwater parts and all, in high definition.

You can see the benefits for yourself, very quickly, with our free trial. You can securely, confidentially and quickly get an analysis of your data room at no cost, and witness for yourself the next stage of the Data Room evolution.

P.S. No analysts were harmed in the writing of this article, though several were rescued from drowning in document reviews.

The first joke my daughter told me when she started school was: “What’s worse than finding a worm in. your apple? … Finding half a worm!” Perhaps that’s one reason she still doesn’t eat apples. But the joke holds true for when you are acquiring a company – you want to find the worm in the apple before you’ve started eating it!

According to a Harvard Business study, the failure rate for acquisitions is between 70% and 90%. When you are acquiring a company, you want to find out what the potential problems are fast. If there is information in the Data Room that indicates potential risk, that is not good. But what is worse is missing it late – you want to find the problems fast.

This is how Reccy helps. You can get to the problems (if there any) quickly.

In their 2024 paper “Impact Due Diligence Principles” Bundesinitiative Impact Investing mentions the important areas to look for potential problems: 1. Financial Issues (such as hidden liabilities or debt), 2. Legal Risks (such as pending litigation), 3. Operational concerns (such as IP rights) and other risk areas such as governance problems.

We cover all these things in our comprehensive report which covers issues like: Products & Services, Competitors, Customers, Market Positioning, Business Risks, Debt, Culture and Technology.

We have 60 points of analysis to provide a comprehensive overview of the data room.

If the data room shows no issues of concern, and your analysis and legal assessment is in agreement, you can move forward with peace of mind. But if there are problems, Reccy helps you identify them quickly and early in the process, saving you considerable expense and time.