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VDR’s, Due Diligence, and Increasing Bids


VDR’s, Due Diligence, and Increasing Bids

There are many different industries that are utilizing the cloud and virtual business solutions. However, one industry that is seeing an increase in profits from virtual business is the legal profession. This is especially true where mergers and acquisitions are concerned. Using cloud services is offering more than just operational savings as it allows more benefit than simply backing up files.

Due Diligence and Virtual Data Rooms:
One tool that is seeing an increase of use from legal services around the globe is the use of virtual data rooms. These highly secured virtual rooms offer both buyers and sellers the opportunity to speed up the due diligence process.

In the past, traditional physical rooms cause lengthy deal times as those interested in making a bid were forced to show up and spend hours going through the documentation. With virtual data rooms, more buyers are able to perform their due diligence at the same time. This also offers the sellers a chance to see which documents are being accessed by which users and gauge their interests based on what is being viewed. This allows them to pay more attention and cater to those users who are seemingly more interested in the purchase.

Increased Bids and Profit:
With traditional data rooms, you were limited on the amount of bidders you can accommodate as they must appear physically in order to view the documents involved in the M&A. With the virtual data room, you can create as many user accounts as needed in order to facilitate all of the interested buyers. Many firms are seeing an increase in bids and higher selling prices than previously.

With physical data rooms, many firms lost out on bids from other countries or those not willing to travel. Those buyers who were slightly interested would often decline from making the trip. As the documents are available in the cloud and can be accessed from anywhere, firms are able to include those who are just testing the waters and possibly convert them to bid. This is also increasing the number of bids and pushing the overall price of the sale.

VDRs and Successful Deals:
As with any M&A deal, time is critical to success. These virtual data rooms that have been adopted by over 40% of the market, has assisted in creating more successful deals within the critical timeframes. With 24/7 access to the documents needed to perform due diligence, the ability to see which buyers are serious, and direct attention to those who have done their due diligence, firms are able to concentrate on the real buyers and successfully close deals that may have been harder to close in the past.

Cloud storage and computing has become a business tool that has already proven its value. Within the law firms who utilize this technology, there is appreciation and increased profits. The ease of access, security, and tracking abilities of VDRs offers more successful deals, less costs, and met deadlines. This technology appears to be here to stay.

Gregory Mercian is corporate lawyer who offers virtual data room information and advice on utilizing cloud technology for M&A.

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