Data rooms play an essential role in successful M&A deals, but their performance leaves much to be desired, argues Mark Edge, managing director of Brainloop UK, the secure enterprise information company
M&A has enjoyed explosive growth both in the UK and across the world over the last few years with deals valued at around $2.66 trillion for the first three quarters of this year, according to Thomson Reuters. Drivers include financial engineering and the desire to save on costs.
Data rooms play an important role by speeding up deal completion. Their use has increased rapidly over recent years and, according to findings published last year by market researchers Global Market Research, the worldwide market for virtual data room services is projected to reach $4.8 billion by 2018.
All well and good, but too few people challenge the way in which data rooms work in M&A. What if there is more to be squeezed out of these technologies that will benefit all interested parties? Has the data room sector rested on its laurels? Have the market leaders become lazy and complacent? More importantly, are customers truly being served?
Many of those customers looking at the sector over the last 15 years will recognise the following issues:
Spiralling costs and irritation because of charging per page with all its small print and contract complexities. Customers are increasingly asking, “Why are we signing contracts per deal?” and they’re fed up with paying for deleted or inflated average-sized pages. Many are also finding it difficult to manage deal budgets and they feel as if they’re being held to ransom for post-merger integration costs.
Static content is another bugbear for many users of data rooms. It’s often necessary to create PDF versions of documents for security, but this is time consuming, with watermarking also presenting an additional burden. Post-transaction, during integration, if native documents are needed for collaboration and editing, this can require further sourcing, which involves more manual work and cost.
How many late night and weekend calls are made and received by frustrated bankers and other players in a deal who are unable to access the deal platform because of the way in which their corporate desktop is built, very probably due to technologies like Java or Active X getting in the way?
Meanwhile during this mobile-first age, when deals could also be done in the mobile sphere, too many data room suppliers are failing to respond to this demand from customers.
Those involved in deals often have concerns about security and not simply because of cyber crime. Very often vendors have access to deal data. Service level agreements might suggest they shouldn’t look at it, but is it really likely that 20-something sales guys and bankers aren’t looking at Premier League players’ information in data rooms during transfers?
New data privacy regulations due in 2017, with their provision for higher fines – up to 5 per cent of global turnover – as well as the evermore serious associated reputational damage of a data breach, are prompting many of those in the M&A industry to tighten their security protocols.
Brainloop clients love the fact that the platform works first time, every time on any browser
At Brainloop we’re challenging these accepted industry norms and all the disadvantages and unnecessary challenges they bring for customers. For example, players in the M&A space, who are concerned about getting the best value for money, appreciate the fact that unlike other providers that charge per page, Brainloop charges per gigabyte, making it easier for clients to control costs. Our cost structure is simpler and more transparent, while our straightforward contracts, which provide for multiple transactions, lead to faster and better return on investment.
Customers like the fact that our dynamic platform allows users to upload and edit documents in their native format, instead of the need for conversion, with PDF conversion done by the platform on the fly when needed. Users can also bulk upload and simply drag and drop. Optional watermarking is also simple and proving to be very popular.
Ease of use
Brainloop clients love the fact that the platform works first time, every time on any browser. One click and a document or spreadsheet is available immediately. What’s more, secure containerised applications for all the major mobile platforms make deal rooms available on the go, unleashing greater productivity.
This integration into Windows and the world’s dominant business applications, such as MS Office, provides users with an easier, more seamless experience, and dramatically reduces training and education cycles. Post-deal, documents are already in their native formats in the data room and ready for collaboration.
Unlike others, we ensure that our clients’ data is shielded from operators and administrators – only deal participants ever see documents. Data is always hosted locally to overcome jurisdictional concerns. In fact, confidence about security at Brainloop is underlined by the fact that not only do clients include Allianz, KPMG, Deutsche Bundesbank and Deloitte, but one of the UK’s main financial regulatory authorities also uses its services.
Rights management is baked in to the platform control document privileges and increases visibility, while automatic watermarking can identify leaks and encourage more responsible behaviour, all of which allows us to lay claim to having the industry’s most rigorous security architecture. The platform is frequently pen-tested to keep us at the top of our game. No wonder more people are turning to Brainloop.
A new dawn breaks in the deal-making business with manageable costs, greater productivity and total peace of mind. Check out what Brainloop has to offer.
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