In past post, we have discussed how the use of data rooms in the UAE has increased in the recent years as the Middle East has increased its weight in the global M&A market. We have been providing Virtual Data Room services in the Middle East for quite a while now, for companies in Dubai, Turkey and Israel and we are seeing a lot of interest from companies in Oman, Bahrain and Saudi Arabia. Here are reasons why due diligence processes are being conducted through Virtual Data Room Providers
1) The processes are quicker
Technology has allowed us to send messages across the world in seconds. Similarly the advent of sophisticated Virtual Data Rooms has allowed due diligence processes to be conducted at the click of a button. The processes are quicker because the wait time to negligible as compared to the former paper based systems which required travel, stay and a sequential process to maintain confidentiality.
2) The bids get higher valuations
Its the nature of the bidding process that the more the bidders, the more the bids for a company’s assets and the higher the possible valuations. Given the vested interest of the seller to get the most for what he is selling it is only natural for him to invite more bidders. Virtual Data Room providers have enabled this process to happen at no additional expense meaning that more interested bidders get added as and when they show interest at a click of a button.
3) It is more secure
When paper based due diligence processes were run, there were no security measures other than a company executive trying to ensure that no documents leave the room. Virtual Data Room providers have the technology to restrict print and copy, track what the users have viewed and disable their access at any point in time irrespective of their previous permissions. There is no doubt that the middle eastern companies have realized that clear advantages of superior security on Virtual Data Rooms; that is why they are using it as their preferred vehicle to do their M&A transactions.
4) All the queries get handled internally
Scouting for email can be painful. A typical inbox today has thousands of emails. Most Virtual Data Room providers have solved this pain point by incorporating robust Q&A features. This enables everyone to manage all the M&A related questions and answers within the Virtual Data Room enabling the administrators to easily export a snapshot of all the questions and answers raised during the life of the deal. The details of who asked the question, what was it relating to, who answered it and when was it answered enables the whole process to run seamlessly.
5) The possibility of future litigation is reduced
In the past it was very easy for the buy side to point out that certain material documents were not disclosed, causing litigation that could have been avoided. Virtual Data Room providers who have detailed audits built in to their systems allow for closer scrutiny of whether the buy side claims are legitimate or not. It only takes a few minutes to dismiss or confirm the claims being made making the possibility of future litigation unlikely, at least when it comes to full disclosure.
6) Easy to share across the globe
Location is not an impeding factor for due diligence anymore. If there is internet connectivity then the world is open to all UAE and middle eastern companies. All the company needs to do is invite the right people to get the right results.
Conclusion
In the global world we live in everything in interconnected. M&A by its nature usually has multiple parties participating. With interests from strategic and financial companies in the middle east region, UAE companies are doing what companies across the world are use to doing i.e. utilizing Virtual Data Room providers to meet the requirement of the due diligence process, in an efficient and cost effective manner.
