Online Deal Rooms Trends

Jun 14, 2006 - by Joel Lessem

The emergence of online due diligence deal rooms is growing. From a few hundred deals in 2002 to an estimated 6000 in 2006. The two leaders (Intralinks, Datasite) are now being beset with smaller, cheaper alternatives as the market matures. These smaller virtual data rooms are sold through financial printers, who can digitize hard copy diligence documentation and post it online for accountants, lawyers and relevant parties to review.

On the other side of the spectrum are the legal software companies companies (Hummingbird, Interwoven) that have launched "enterprise collaboration tools" that handle due diligence and the actual collaboration over drafting closing documents. Downside is these enterprise tools tend to be generic for many different legal matters and they are not super intuitive for managing transactions specifically. They also require an investment in implementation and IT resources.

Virtual Data Room Activity a Leading Indicator?

Jun 29, 2009 - by Aaron Booth

Over 250 financial and legal advisory firms are using their own, privately branded Firmex data rooms. Firmex-powered deal activity was up 255% in Q1 2009 versus a 10% decline in Q4 2008.  According to Firmex’s M&A advisory clients, the increase is a result of sellers bringing deals back to market. The majority of the increase occurred late in Q1 2009, and the trend is continuing into Q2 2009.

Firmex advisory clients are busier with more deals, and the deals are lasting longer and appear to be more challenging to close. Tight credit conditions and lower valuations are most likely key factors. Over time, the number of active deals that firms are managing in this environment is increasing and deals are being reviewed by many potential buyers. This puts pressure on deal makers, as deal cycles are long and unpredictable.

Firmex helps to alleviate this pressure by allowing firms to manage an unlimited number of deals indefinitely in their virtual data room. Deals can be started, stalled, and reopened as needed, in a fast, easy and efficient manner. In addition to securely sharing due diligence information, Firmex is also being used to organize the distribution and storage of NDAs, Information Memorandum, and LOIs. This flexibility and deal lifecycle management enhances M&A advisory firm’s ability to react quickly for clients.  This is especially important when deals get hot and being “deal ready” will help to close deals faster and mitigate risk of the deal stalling.

Why Is Unlimited Use of Virtual Data Rooms so Beneficial?

Feb 11, 2010 - by Joel Lessem

It has always puzzled me as to why virtual data room providers charge per data room or per page or total number of users.  How can any company running a deal know exactly how many pages of documents they will have? Or how many users are going to access the deal room? 

Therefore, a buyer is unable to predict the final cost of the VDR. If they misjudge the amount of due diligence documentations or users, they can get stuck with a hefty bill. This type of “multi-line item” quoting is not designed with the customer in mind.

The other item I never understood is why the limitation on the number of deal rooms?  It’s not uncommon to have multiple data rooms for a single project.  More so, it’s the ability to start getting “deal ready” and exchanging documents early on in the mandate. Unlimited use also broadens the scope of use.

Alternatives to Expensive and Time-Consuming Air Travel

Feb 23, 2010 - by Nicole Black

Let’s face it, these days, business air travel is a costly proposition—it’s expensive and takes up valuable time.

And, travel time is only increasing due to the recent attempted terror attack, as widely reported in the press.  For example, as explained in a recent Montreal Gazette article:

Massive lines, flight delays and cancellations greeted Canadian passengers traveling to the United States on Sunday as new security measures moved into a second day and another suspicious incident was reported on board a U.S. flight, increasing tensions.

Weather delays aren’t helping matters either, now that we’re in the midst of a long, cold winter, as detailed in this Chicago Sun Times article:

A messy winter storm — which could bring up to a foot of snow…— caused major headaches for travelers…prompting more than 500 flight cancellations at  both city airports.

One way businesses can avoid the time suck of costly air travel is to utilize innovative alternatives to face-to-face business meetings, such as video conferencing, screen sharing and online document sharing.

Data Room Performance Improvements at Firmex: An Overview

Feb 25, 2010 - by Marcel Meyer

Because data room performance is important to our clients, we recently released the first wave of our new software architecture to address the growing demands of our customers.

For the past few years, our customers have primarily used our data rooms for M&A deals which are usually made up of around 300 folders containing 5000 documents. However, as our clients are adopting electronic deal rooms for other uses, such as litigation and clinical studies, we decided to adapt to these new requirements. Some of these virtual data rooms might have over 80,000 folders containing more than 100,000 documents.

We’re excited to roll out our new architecture that supports sub second data retrieval, even on these large scale deals.  These improvements represent considerable time and money savings for our clients working with multiple small to large transactions. The litigation and life sciences verticals will greatly benefit from these data room improvements.

Virtual Data Rooms: Modernizing the Workspace

May 12, 2010 - by David W. Hammer

Most of Firmex’s clients are now using the internet to distribute seller’s books or confidential information memorandums when managing a sell-side M&A transaction. However, there are firms that are continuing to create physical books, which can range from 50 to 200 pages. These books are typically distributed to a large number of potential buyers, particularly if an advisory firm routinely markets transactions to a database of private equity firms.

The recent advent of the kindle, the iPad and other paper eliminating devices serves as an interesting marker of just how archaic a practice it is to produce physical books for an industry as fast paced as M&A.  Producing that many physical books is outdated, expensive and time consuming.

The cost (not to mention the carbon footprint expenditure) to produce, print, bind and ship one book can be upwards of $100 and can take anywhere from 24 to 48 hours to reach its destination. If you are marketing a transaction to 40 potential buyers with a seller who wants to close quickly, this lag time can significantly affect  profit on the transaction (or the seller’s cost) and the transaction timeline.

Corporations Choose SaaS Solutions for Secure Online File Sharing

Sep 16, 2010 - by Aaron Booth

In the past six months, we’ve noticed that corporations of various sizes across multiple industries have been turning to SaaS solutions to share large volumes of critical information beyond their office firewall.  More specifically energy, biotech, manufacturing, health care and pension fund sectors have been actively seeking a more secure way to share and collaborate internally and with external parties.  It appears that no matter what business you are in or what your businesses processes are, there is always a need to securely share large volumes of information easily and cost effectively.  Email, FAX and courier are not secure enough and continue to be cumbersome and prone to error.

Historically, sharing documents online in virtual data rooms have primarily been used for due diligence in M&A , fund raising, refinancing, and real estate transactions.  Corporations are now recognizing the value of sharing information online to complement or improve document intensive processes, streamlining real world business challenges such as RFPs, Engineering, Procurement and Construction compliance, financial reporting, audits, board communications or simply having an accessible repository of key legal documents.   Documents are often more secure online than stored on in-house computers, flash drives or distributed as attachments using email.  Using Firmex, clients organize and access literally millions of documents in a SAS 70 compliant environment with encryption transmissions, and fully segmented and secure databases with mission critical redundancy, which is often not the same environment that office computer storage provides.

The Art of Listening

Nov 8, 2010 - by Elizabeth Caley

Today marks the start of my third week at Firmex.  People ask me what I do.  I could answer about the business unit I managed at Microsoft, or the product portfolio at Hummingbird, or the scope of my responsibilities as VP of Product Management at Firmex.

Instead, I answer this way, “I listen."

I’ve had the pleasure of listening to 1% of our customers in my first weeks through a series of calls and visits.  Might not sound like a lot, but my plan is to continue listening.  I’d like to have listened to every Firmex virtual deal room customer in the next 18 to 24 months.

Here’s what I’ve heard so far:

I’ve learnt that our customers are using Firmex virtual data rooms for a tremendous breadth of uses beyond M&A.

I’ve learnt that there is a huge amount of respect and admiration for our Customer Support team. I’ve learnt that there are many commonalities to how our customers want Firmex to continue to develop as a product.

And yes, there are things here and there that folks want us to change and fix in the short term.  I’m keeping a list and we’re prioritizing, and getting them scheduled with the development team.  I’ll be keeping everybody updated on our progress.

In the meantime, give me a call or send me an email -- if you have ideas for my list or you want to talk about how you’re using Firmex today and planning on using it tomorrow.  I’m listening.

Virtual Data Rooms - Top 5 pricing considerations

Mar 17, 2011 - by Aaron Booth

When you’re procuring a virtual data room (VDR), time is of the essence and price is always a factor for you and your clients. During discussions with a potential VDR partner, make sure you know what is included in the price.  Knowing what to look for will ensure that you avoid surprise discussions around hidden fees, so you can concentrate your time on the deal - not the data room. Here are five things to clarify when obtaining a price for a virtual data room:

1. Price Certainty – Make sure the VDR price is fixed and there are no hidden fees for support, services or additional storage. Any fees for extending the length of the deal should also be discussed upfront, just in case the deal process take longer than expected, which tends to happen.
2. Page Count – I have always been perplexed by per page pricing. Who counts thousands of pages? What happens if pages are added or deleted as the deal progresses? Do you pay for blank pages, tables of contents, cover pages? Per page pricing is an outdated pricing model that has its origins in commercial printing.  Per page pricing is not suited for the digital age and should be avoided at all costs.
3. Storage – Secure storage doesn’t have to be expensive. Some vendors will flaunt the fact that they store your data on their own secure servers, but if you start asking questions, you’ll likely find that their features don’t measure up against an industry leader like SunGard. SunGard specializes in data storage and security for the world’s top financial institutions and SunGard’s systems account for and manage more than $25 trillion in investment assets and process more than five million trades a day.
4. Training and Consultation – Find out how much training is included for the price and the experience level of the trainers. You don’t want to end up paying extra fees because a system is hard to use and you want to trust the person who is helping you set-up your deal.
5. Support – Anything less than 24/7/365 is not good enough, and shouldn’t cost extra. Deals span time zones and people work after hours and on weekends. You and your clients need peace of mind that all of your users will be supported, anywhere and anytime.

At Firmex we pride ourselves on providing our clients with straightforward pricing and reliable service that ensures the client experience comes first.