According to a very interesting McKinsey Quarterly article, acquisitions are in general successful if they follow one of these objectives:

• Improve the target company’s performance

• Consolidate to remove excess capacity from industry

• Accelerate market access for the target’s (or buyer’s) products

• Get skills or technologies faster or at lower cost than they can be built

• Pick winners early and help them develop their businesses

There are other factors that are normally used as part of a "deal rationale" such as "We are Buying Cheap", "This is a transformation deal", "This is a key part of our roll-up strategy".  The research shows that those reasons rarely create value. 

Last Friday marked the coming of age for the Virtual Dataroom Services sector with the first IPO of a pure-play VDR provider.

Congratulations to Intralinks on its IPO. Intralinks has been one of our main competitors in most markets for almost ten years.

As Bloomber covered last week, the capital raised was mainly to fund the partial repayment of the debt it took in 2007.

This is a very significant event for the industry, congratulations!

Interesting article by Paul Siegenthaler author of the highly recommended book "Perfect M&As" about the 10 main reasons for M&A failure.

Paul highlights poor due diligence as one of the key factors that make M&A transactions fail. I cannot agree more. In the last 20 years I have participated in a number of transactions in which value was destroyed due to poor due diligence.

The main reasons that I see for poor due diligence are:

- Asking the wrong questions.  Focusing on details before deciding what actually drives value for the acquisition.

- Disconnect between the deal team and the due diligence team.  In many transactions, there is a significant gap between the deal team and the team executing the due diligence whereas the deal team just sees the due diligence findings as hurdles.

- No real business due diligence.  Many DD processes turn into a legal/financial/risk audit too early into the process, ignoring the "real" business due diligence.

- Organization of information.  Many data rooms do not take advantage of the great deal tools that most virtual data room provide such as organization of folders, Question and Answer, reporting.

What do you think?

In general, you should consider engaging a virtual dataroom (VDR) provider to share and control documents with an outside party while maintaining confidentiality and being able to track access to a given document. In particular some of the areas you should focus on are:

• Preparing documents for a transaction, especially when documents need to be put together from different sources and shared with different parties.


• Circulating information memoranda or teasers. A good virtual data room will make the process easier and will provide valuable tracking and audit information.


• Turning around drafts of legal agreements. A good dataroom offers a very simple, secure and easy-to-use document versioning system without the expense of complex dedicated document sharing platforms.


• Conducting due diligence, as a substitute for a paper or email-based data room.


• Closing a transaction, as a substitute for hard copy deal bibles. Very useful when reps and warranties are a key component of the transaction.