In the dark ages of Mergers and Acquisitions – less than a decade ago – caffeine-fuelled tours of duty where a suitor's team of experts assembled to paw through boxes brimming with confidential documents that held the financial secrets of a prospective acquisition. The process could stretch on for days or weeks and would cost a small fortune.
It’s amazing how far trade has travelled on the back of ones and zeros. The concept of the Virtual Data Room is devilishly simple. First developed in 2001 – parties to the deal are invited to join a remote VDR website by the host, who grants them secure encrypted personalised access rights. Using a secure log-on supplied by the vendor/authority which can be disabled at any time by the vendor/authority if a bidder withdraws. Documents are stored in an easy-to-read electronic format on a central server that's accessed securely via the Internet, eliminating the need for bidding parties to travel to the documents.
Interested parties are free to research documents, conduct checks, print and save permitted documents, all based on their levels of access. The upshot is, M&A analysts can work simultaneously at their own pace, at any time of the day or night; from anywhere in the world; while not over-dosing on coffee.
With the possible exception of airlines, hotels, takeaway restaurants and Starbucks, everyone benefits.
Typical users include vendors, buyers, lawyers, bankers and other key advisors who use the space to study a wide variety of material – from corporate records, management data and property documentation, to insurance statements and marketing plans. Vendors are able to create strong selling opportunities for businesses, cast a wider net for prospective buyers, all the while gaining an insightful preview into bidders’ interest in their deal. Overall, VDR rationalize the entire due diligence process, affecting a smoother, more efficient route to liquidity.
VDRs are suitable for almost any kind of situation that require due diligence - mergers, acquisitions and disposals, IPOs and secondary offerings, asset purchases, liquidations, bankruptcies. As you can imagine, the last two years have been something of a boom for VDR providers.
It is estimated that VDR technology was in use for almost 80 percent of all North America-based M&A deals last year. In light of the recent economic growth in SE Asia and wave of subsequent buy-ups the use of a VDR becoming standardised throughout Europe and Asia.
Firmex, a virtual data room provider announced recently that revenue for 2010 is 85% more than the corresponding period a year ago. The Firmex customer base has also doubled year over year. Firmex momentum continues as it has achieved exponential growth each year since 2006.
"We are seeing an increased breadth of use beyond M&A into vendor management, board reporting, corporate governance, clinical trials and other uses that involve large volumes of highly sensitive documents and sizable numbers of participants," says Firmex CEO, Joel Lessem. "Our growth is attributable to capturing market share and an expanding market. Organizations increasingly prefer to review and distribute sensitive documents in an electronic data room environment versus email, paper or DVD. Firmex customers span a breadth of industries such as financial services, legal, life sciences, energy and technology. We continue to add customers in both established and emerging economies around the globe."
Typical users include vendors, buyers, lawyers, bankers and other key advisors who use the space to study a wide variety of material – from corporate records, management data and property documentation, to insurance statements and marketing plans.
The leading company in the VDR field, Merrill DataSite was recently named “Product/Service of the Year” for the second year in a row by a leading M&A body. Speaking at the 9th Annual M&A Awards, presented by the M&A Advisor in New York, Richard Martin, senior director of Merrill DataSite had this to say:
“For the second year in a row, Merrill DataSite has been selected by its peers as the leading M&A product/service in the industry, and we’re extremely honored by this recognition. We believe this award demonstrates just how integral a part Merrill DataSite plays in today’s financial transactions, as well as how respected our VDR service and extraordinary customer support are in this industry.”
With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organization-wide discipline in the management and processing of confidential content.
Merrill DataSite is the first VDR provider to understand customer and industry needs by earning an ISO/IEC 27001:2005 certificate of registration – the highest standard for information security – and is currently the world’s only VDR certified for operations in the United States, Europe and Asia.
Merrill DataSite provides unlimited access for users worldwide, as well as real-time activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service - all of which help reduce transaction time and expense. Merrill DataSite’s multilingual support staff is available from anywhere in the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours or less.
As the leading provider of VDR solutions, Merrill DataSite has empowered nearly 2 million unique visitors to perform electronic due diligence on thousands of transaction totalling trillions of dollars in asset value.
Since its inception, Merrill DataSite has uploaded and processed 300 million pages in its virtual data room (VDR) for banking M&A, transfer of small business ownership, document warehousing, IPO and secondary offerings, asset purchases, venture capital due diligence, bio tech licensing, commercial and corporate real estate ventures, bankruptcies, corporate debt restructuring, preparing for exit strategies, and many other transactions that require extensive document sharing.
“We are very pleased to be selected as part of this illustrious group for our services to the international M&A community,” said Ed Bifulk, president of Merrill DataSite. “We work extensively with international transactions, helping our clients expedite their due diligence activities through our award-winning virtual data room solution. This recognition reinforces the value and bottom-line impact that our clients receive from our service-oriented team and exceptional VDR platform.”