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.

Legal and Financial Advisor are Raising the Bar: Online Documents = Better Client Service

Jun 29, 2009 - by Joel Lessem

Being organized ultimately means less mistakes, getting the work done faster and providing superior service.  Whether it is completing a transaction,  structuring a businesses or managing a clinical trial are volumes of documents.   Having documents highly organized, accessible and online access reduces the voicemails, "lost" e-mail attachments and miscommunication that frustrates any collaborative process.  As one attorney commented

“My important clients use the internet for convenience with their other service providers. They bank online, they book travel online, they file taxes online - and I want to be able to provide them with a convenient way to work with me, online!  Either I proactively set up online access to key documents for my clients; or wait until they demand it because everyone else is doing it. And since there is virtually no material impact to my practice – why should I wait?”

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.

News: Virtual Data Room Enhancements for Large Projects

Jan 21, 2010 - by Joel Lessem

At Firmex we are proud to announce significant enhancements on our virtual data room technology platform. The following is an extract of the press release made public today:

Firmex has released a new architecture that exponentially increases the speed in which users can review large volumes of documents.   “Since we do not charge for data or documents stored, our clients have increasingly been using Firmex for very large transactions. These transactions can run 10,000 to 100,000 document folders, each containing sets of documents”.

While this is not common on your average M&A transaction, if you’re restructuring asset-backed loan portfolios, running a multi-billion deal,  sharing clinical study findings, or reviewing litigation documents, sharing large volumes of documents is not uncommon” says Randy Rosenberg, Firmex CTO. With this highly efficient technology, Firmex can accommodate our increasing roster of large projects. “Our policy of unlimited use and cost certainty for our clients forces us to develop high-speed and efficient technology.  The combination of drag & drop functionality and the ability to move thousands of documents rapidly to and from the data room and the speed enhancements for large transactions saves our clients considerable time and money when managing transactions.  They are all aligned with our focus on speed and ease-of-use as key development objectives” says Rosenberg.

You can go here to see the full press release.

Understanding Virtual Data Rooms

Feb 4, 2010 - by Joel Lessem

A virtual data room (“deal room” or “data room”) is a secure web-based document repository generally used for buyers or investors to perform their due diligence on M&A transactions or investment. It is however an increasing trend in top legal firms to use virtual document rooms to support business and commercial litigation processes for external collaboration and file sharing.

The virtual data room replaced the physical data room where binders of documents were stored in a secure “monitored data room” and potential buyers or investors would confidentially book time in the room.  Multiple investors and buyers to simultaneously log into the virtual data room website to review documents anonymous to each other.  Virtual data roomtechnology can prevent visitors from saving or printing certain documents and limit viewing time if required.   Virtual deal rooms are easy to set-up with high-powered tools that can upload or download 100s if not 1000s of documents in a matter of minutes or a couple of hours directly from a single local source or multiple locations.

Electronic data rooms fully mimic the physical data room but without the required travel or the inconvenience of booking sequential visits.  A shorter time frame for reviewing diligence information and reduces risk of a deal going off track and potentially can increase bid values with a greater sense of urgency.

In 2001 several hundred M&A transactions were conducted on virtual data rooms.  By 2008 the vast majority of M&A transactions (in the tens of thousands), ran their comprehensive due diligence process in such an online workspace.  This has been aided the growth of lower cost and highly secure virtual data room providers.

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: Unlimited-Use Closes Deals Fast

Mar 4, 2010 - by Joel Lessem

In any deal, time is risk.  The longer it takes to close a deal, the greater the potential for the transaction to get derailed.  Being prepared ahead of time is one way to avoid time delays and risk.

Firmex’s unlimited use virtual data room broadens the range of use investment banks have for their data rooms exponentially: they can collect information to develop and circulate CIMs when marketing transactions and have their client prepare diligence information early. When the LOI is signed, diligence documentation is available and valuable deal momentum is maintained.

Shopping for virtual data rooms at the 11^th hour adds unnecessary risk to maintaining momentum and effectually closing the deal. In some cases our clients may be running multiple transactions as part of one deal (eg.debt refinancing, 3^rd party valuations, selling certain assets etc.). With Firmex, clients can startup additional data rooms to coordinate and manage related transactions at no additional cost or delay.

Firmex charges a flat subscription fee for unlimited data rooms at the same cost as a single data room from an alternative data room provider. The M&A advisory firm can set up and maintain control over all their active mandates, have cost certainty for their clients, and get deals organized ahead of time to avoid delays in the M&A process.

Virtual Data Rooms Offer a Secure Alternative to Email

Mar 9, 2010 - by Nicole Black

As discussed last week, the unencrypted email systems used by most law firms are inherently insecure and place confidential client data at risk.

However, there are secure alternatives to email, using cloud computing products, like Firmex online document workspace, that incorporate some form of encrypted client communication into their platforms. These cloud computing platforms provide lawyers with a ready-made solution to the problem of unencrypted, insecure email.

There are a number of products available that allow attorneys to securely exchange large volumes of confidential documents and information with opposing counsel, clients and others. For example, law firms can use secure virtual data rooms such as those provided by Firmex,  to collaborate and communicate with other users, manage online due diligence, exchange closing drafts, create digital record books, share litigation documents, and secure client access to important files.