Post-M&A litigation and legal cost controls are key drivers in use of virtual data rooms
Drooms, the global virtual data room specialist providing solutions across real estate, corporate finance/M&A, life sciences and corporate services, has expanded into the UK.
One of the drivers for greater use of virtual data rooms is increasing post-M&A litigation, which has put due diligence in the spotlight as the regulatory landscape gets ever more complex, while the common use of fixed or capped legal fees has put a premium on better efficiency in due diligence.
A recent survey of 100 senior European corporate executives undertaken by Drooms asked why transactions fail to complete. Fifty eight per cent believed that this is a result of poor preparation and a further 38 per cent referred to the problem of incomplete or unstructured documentation, compared to 43 per cent who mentioned failure to agree on purchase price.
Data rooms in M&A and corporate transactions are unique in that sellers typically provide confidential, market-sensitive information on a “view only” basis to a number of bidders, who may include commercial competitors as well as financial buyers. An exceptional level of security is therefore required, along with a full audit trail, with every page viewed in a Drooms data room, for example, being electronically watermarked.
As interest in efficient virtual data rooms continues to grow, Drooms appointed Howard Revens as managing director to lead the recently established London office, with Piyus Shah just recruited to work alongside him.
“There is a huge opportunity in the UK for a virtual data room provider with a deep understanding of what law firms, advisors and companies undertaking transactions really value,” says Revens. “Fifty four per cent of corporate executives we surveyed admitted to not having used a virtual data room when handling business-critical transactions before now. Over the next five years the need for virtual data rooms in M&A, real estate, private equity and asset management is likely to significantly increase, so this is an ideal time to enter the UK market.”
When considering 2013, 86 per cent of respondents said they would use virtual data rooms to some extent when handling business-critical transactions.
Jan Hoffmeister, co-founder of Drooms, says: “Drooms is a global company with offices across Europe, Asia and South America. We are very different from other players in that our solution has been purpose-built from the bottom-up, in other words designed by M&A professionals, such as myself and developed solely for the secure exchange of sensitive documentation. Establishing a presence in London is critical to our ongoing expansion, at a time when transactions are becoming increasingly complex, and secure, efficient virtual data rooms are imperative for successful transactions.”
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