The advancement in sophisticated technology has allowed multi-million dollar transactions to be conducted on the internet through data rooms. With the middle east recording twice as many transactions in the first quarter of 2014 as opposed to the last quarter of 2013 at $2 billion, it is no surprise that data room due diligence are happening virtually. With the UAE being the 19th most attractive country for M&A activity globally, investors are probably doing due diligence predominantly in a data room setting for the following five reasons:
1. Bidding Leads To High Valuations:
The best way for owners to get the highest value for their company is to put up a bidding process. And the easiest way to manage this bidding process is through a confidential virtual data room. Once the data room has been collated with the relevant data interested strategic or financial investors can be invited to the data room to look through documents with their legal advisors, one of the most active participants in any due diligence process. The advantage of using a virtual data room for this process is that multiple interested investors can be invited to do due diligence simultaneously. The more the bidders, the higher the number of bids. The higher the number of bids, the higher the likely valuation.
2. Investing Globally Is Easier Through Data Rooms:
Middle Eastern countries are diversifying their portfolios by investing abroad. How do they get access to opportunities in Europe, the United States and Asia through their advisors? Just like they give access to their confidential data on virtual data rooms, they are given access to other companies confidential data through virtual data rooms. The sophisticated technology that virtual data rooms provide enable multiple opportunities to be evaluated in a short period of time. This would never have been possible in the 1990s!
3. Data Room Enables Due Diligence At Zero Incremental Cost:
Now that we know that UAE companies are getting investors and investing abroad by going through due diligence processes on Virtual Data Rooms let’s also add the cost savings that the technology enables. Increasing the number of bidders from one to three, five or ten comes at no additional cost to the company nor are there any delays in creating access to the data. All they have to do is add them to their confidential virtual data room, assign the permission rights they have on that data, add them to a group to manage their permissions more easily and send them an email invitation to start their due diligence. All this takes less than 5 minutes!
4. 24-7 Access, 365 Days A Year Expedites The Due Diligence Process:
When companies doing due diligence in the United States stop working, investors that are interested in the Middle Eastern companies in Asia start working, and as the Asian investors are approaching mid day, the Europeans are starting their work day. What all this means is that due diligence on data rooms has enabled 24-7 work, 365 days a year. This is what has lead to record transactions to conclude in record time.
5. 24-7 Support, 365 Days A Year At 0 Additional Cost Has Instilled Confidence:
Due diligence processes can throw up multiple scenarios. Besides the technical issues that rarely crop up, additional data, new users and intricate permissions are frequent demands from investors that the Middle Eastern companies have to immediately respond to. Having a dedicated team of professionals who are experts in managing the clients specific data room requirements has instilled confidence in the technology and the process that award winning virtual data rooms like EthosData provide. This has made the decision to do due diligence on data rooms easy for middle eastern companies.
Conclusion
The UAE has evolved to provide a stable legal framework to instill confidence in global companies looking for opportunities outside their regions. No M&A transaction can take place without the exchange of confidential information between the sellers of the assets and the buyers of those assets. The safest, cheapest and easiest way for middle eastern companies to offer access to their proprietary information is through the use of virtual data rooms. Similarly the best way for many cash rich Middle Eastern companies to invest globally is to scout for opportunities through access to sell-side mandates on data rooms.
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