Prior to my managing a Virtual Data Room company, I had the opportunity to work on a number of M&A transactions which required a significant amount of data sharing between parties. This was the time when physical Data rooms were still the first option for most of the transactions and virtual datarooms were still very rare. The first time we used a virtual data room, the costs went significantly over our initial estimates. We were very surprised with how quickly the total fee charged by the dataroom provider ballooned to a cost that we were uncomfortable with.
Things have changed a lot since then and thankfully now princing structures are more transparent with less surprising to clients.
“ That was then, this is now. A history of virtual data room pricing “
Early Day Pricing
Previously, data rooms were very expensive and pricing was confusing. Prices were high, charged per page and sometimes even users and with substantial hidden costs such as DVD archives at the end of the project and weekend assistance that pushed up the final bill amount. Costs were often determined by the number of pages, viewers, selected security features, weeks available for viewing and similar factors. Your monthly fee covered the standard services, while anything extra only showed up when the amounts were due.
In the infancy of virtual data rooms, sell side companies and advisorswere reluctant to engage a virtual data room because of the factors mentioned above. A lot has changed since then.
Modern-Day Pricing Structures
Types of Pricing Models
Today a reputable virtual data room provider offers a pricing structure to fit clients’ needs. Not only are current pricing models simpler and more transparent, they’re also more flexible.
These typically include a fixed amount of storage space priced for the period during which you use it. No, you don’t have to guess how much you’re going to need—your virtual data room provider can calculate this based on experience of former transactions.
These plans work best for smaller projects with lower virtual data room requirements than the typical large transaction. The plans offer two main variable elements, which are
a) the space/page count, and
b) the time period for which the client needs the facility.
Which to Choose?
So how do you choose the right virtual data room for your requirements and still ensure you’re paying only for what you actually need? It’s simple:
Find a service provider that’s owned and managed by corporate and M&A experts. That way, you’ll know your provider understands your needs and wants in this transaction-based industry.
Look for options flexible enough to ensure that if your transaction grinds to a halt over legal or compliance issues, the provider will freeze the project so you aren't charged for the dormant time period
Ensure that you agree to terms that are transparent on pricing to avoid problems down the line. No matter how good the product or process is, if a virtual data room provider isn't transparent about its pricing it won’t be an integral part of your team.