Virtual Deal Room Usage Surges
ACG
NEW YORK, October 29, 2007 – As M&A volumes and competition for deals rise, U.S. merger professionals are utilizing virtual deal rooms to take advantage of efficiencies, according to a recent survey of more than 350 U.S. active representatives of middle-market companies, investment banks, private equity firms, law firms, accountants and consultants by ACG (Association for Corporate Growth) and Merrill Corporation.
Virtual deal rooms (VDRs) are online data rooms accessible via a secure Internet browser. They are designed to optimize the due diligence process by overcoming the many limitations of a traditional paper-based data room. Working with a virtual deal room or datasite allows managers can scan and index all relevant documents and create a centralized, electronic library of due diligence information that is accessible across borders. VDRs allow multiple parties and prospective buyers, regardless of their location, to participate concurrently in the due diligence process, which ultimately accelerates transaction cycles and reduces transaction costs. Respondents reported that 65 percent of deals in 2006 involved a virtual deal room (VDR), up from 35 percent in 2004. 69 percent said VDRs are especially important in cross-border deals.
“The prevalence of cross-border transactions, combined with increased competition for deals, is driving dealmakers toward the time and cost saving benefits of virtual deal rooms,” said Paul Stewart, ACG Chairman and Partner at PS Capital Partners LLC. Thomson Financial’s second quarter 2007 Mergers & Acquisitions Review indicates that cross-border activity accounted for a record 47.5% of worldwide activity for the first half of 2007.“Legal and regulatory environments can create significant obstacles for cross-border buyers,” said Paul Hartzell, Senior Vice President, Merrill DataSite. “These issues can be addressed by using a VDR with controlled access to the professionals needed to make the deal work. Merrill DataSite and other VDR solutions provide the instant ability to distribute information and manage a complex deal team in every cross-border project.”
Executives utilize virtual deal rooms for activities such as M&A activity or divestiture (61%), leveraged buyouts (24%), financial restructuring (14%), private placement transactions (12%) and, bankruptcy or reorganization (5%). Respondents listed completeness of information, time, accuracy and costs as the top issues they face. The survey found that respondents feel that VDRs directly respond to these issues. In addition, almost half of the respondents reported improved ROI as a result of VDRs.
Survey Methodology:
The results cited in this news release reflect the responses to the ACG/Merrill Corporation Survey by 357 U.S.-based ACG members and Merrill Corporation contacts, including corporate executives and corporate development officers (22%), private equity professionals (11%), investment bankers/intermediaries (26%), lender/finance providers (10%), service providers, such as lawyers, accountants and consultants (30%), and others (3%). The annual revenue for respondents’ companies was: corporate strategic buyers – less than US $5 million (26%); US $6 -100 million (25%); US $101-500 million (17%); US $501 million or more (32%) and private equity firms – less than US $100 million (46%); US $100-500 million (35%); US $501 million to $1 billion; more than US $1 billion (12%).
