RC: Could you provide a brief overview of the function and operation of virtual data rooms (VDRs) in the M&A context?

Kelly: With the advent of the digital age via the internet we have seen most things that existed in physical or analogue form transformed into a digital or virtual format. The data room market has been no different and over the last 10 years or so we have seen physical data rooms (PDRs) move into VDRs. This has brought huge benefits to organising the M&A due diligence process for sellers and buyers alike. For the first time, all parties can access confidential documents locally on their computers in diverse locations without the cost of having to visit a PDR in some far-flung city to view documents. Against this backdrop, sellers have found that they have been able to reach out to far more parties on a global scale, increase transactional speed and reduce their costs at the same time.

RC: What are the key advantages of using VDRs on both the sell and buy side? In what ways has their use altered the deal execution process?

Kelly: The advent of the VDR has changed the market forever and has brought a multitude of benefits to analysing data more quickly and efficiently. The main advantages of VDRs are that they, by and large, accelerate the due diligence process by making the necessary due diligence information accessible via the internet. This reduces the cost of the due diligence process overall by eliminating the need to travel, copy multiple physical binders and rent several dedicated physical due diligence rooms. In addition, VDRs make it possible for multiple bidders to participate in the due diligence process simultaneously without inadvertently bumping into each other in a traditional physical data room. Furthermore, seller and buyer both benefit from the cost and time savings, improved legal compliance and security and ease and speed of set up. It is also worth pointing out that conventional physical data rooms also clearly hindered the process of reaching out to a global market, where the virtual data room has done the opposite, opening the sale up to more bidders and therefore potentially better sale prices.

Oct-Dec 2014 Issue

HighQ Germany