A new technology is beginning to triumph in investment banking: the virtual data room. Regardless of whether it is a takeover or raising capital – the time-consuming examination of a company’s books (due diligence) is often no longer carried out in rooms crammed with mountains of paper, but online. Roughly a quarter of all mergers and acquisitions are now processed using electronic data rooms.
VDR for Banking
Virtual data rooms, in which companies put all relevant information on the Internet, have emerged in the USA. But the new technology is also being used more and more frequently in Germany – for example with the sale of Landesbank Berlin. Siemens even sets up 120 data rooms every year, says Kai Lucks, who is responsible for M&A integration at the group. Smaller companies have also discovered the tool. According to estimates by Christoph Louven, partner at the Lovells law firm, which itself offers electronic data rooms, this instrument is used in around half of takeovers worth between 150 and 500 million euros in Germany.
Perhaps the biggest advantage of the Internet is that companies usually save themselves the need to set up physical data rooms. In addition, in this way several interested parties can examine a company at the same time – in times of physical data rooms, interested parties were only allowed to access the sensitive information one after the other, which lengthened the sales process.
The process also has advantages for buyers. You no longer have to travel from countries that may be far away to get an accurate picture of the economic situation of the object of desire via due diligence. Instead, they can do this conveniently from their own offices via the Internet, and 24 students can do this seven days a week. According to experts, this can lead to investors from abroad also being interested in a German medium-sized company who would otherwise have waved them off simply because of the high travel costs.
Wide Range of Function Settings
Investment banking includes a wide range of technical transactions and services such as underwriting, support for mergers and acquisitions, financing determination and many others. Our experts have become familiar with the numerous features of this industry and have adjusted the functionality of the data room accordingly. Using our virtual data room has the following benefits:
- Activity Tracking As soon as you open a virtual data room, you can track signs of interest in the services you offer. Since all files are displayed in real time and are constantly updated, you will understand in which areas the services are most in demand. On the VDR, you can also restrict monitoring using various filters. This will tell you in which countries or sectors your activities are of interest.
- Implement generic scoring. “Investment must be justified” is the motto of every successful investor. In order to understand whether a business or product can be profitable, it is necessary to make a reasonable assessment of the business benefit, as well as financial and legal aspects. VDR gives you that option. Our virtual data rooms provide a centralized platform for reporting, compliance documentation and due diligence. The company that manages the digital data room can also change access rights at any time and manage them in any way. If you want to attract the attention of investors right now, you can not archive information about the projects you have implemented, but store them on the platform for a longer period of time.
- Use questions and answers for analysis. For your convenience, VDR has developed a built-in comprehensive Q&A section that focuses on important aspects of functionality. Thanks to the content of the “Questions and Answers” section, potential customers will learn a lot about the business without posting additional discussions.
For banking institutions and investors, the security of vulnerable files is critical. Thanks to our virtual data rooms, you can enjoy the functionality of an end-to-end platform that manages content by investment interest without worrying about security.