6:04 pm
Strategic inflection points indicate the astonishing ways in which the economics of industry change as time progresses.
I am reading Only the Paranoid Survive by Andy Grove, the legendary CEO of Intel. In the book, Grove focuses on dramatic changes to the economics of an industry, which he calls “strategic inflection points.” One “inflection point” he discusses is the disruption the PC brought to the computing industry.
A virtual deal room is a convenient tool to securely organize and share large volumes of documents during the Private Placement process. An online document repository, or virtual deal room, is an attractive alternative to email for collecting and sharing this information in an organized fashion while keeping the data safe.
Recently, I have been talking to professionals that specialize in issuing private placements. A private placement is a funding round of securities that are issued to a select group of targeted, private investors. In my discussions, it has become apparent that there is an opportunity for professionals in this space to leverage the capabilities of a virtual data room, particularly if they manage more than one of these transactions annually.
The Checklist Manifesto, a compelling book by Dr. Atul Gawande, explores the crucial improvements that following the template of a basic checklist can make to one’s life and workplace.
In The Checklist Manifesto, Dr. Atul Gawande examines how the use of checklists can significantly improve workflows and outcomes in the work environment. He focuses primarily on the aviation and construction industries, and analyzes where and how checklists are used. He speaks as well about his experience in a WHO-sponsored initiative bringing checklists to surgical operating theatres around the world. There are, I believe, possible applications of his ideas within a law firm.
In the wake of the recession, business owners are seeking ways to repair damage. Employee Stock Ownership Plans (“ESOPs”) are a practical resource when attempting to convert privately owned company stock into assets that are more liquid.
While the M&A market continues to recover, business owners are utilizing Employee Stock Ownership Plans (“ESOPs”) to satisfy the need to convert some of their illiquid privately held company stock into cash and other liquid investments. The ESOP is attractive due to significant tax savings to the owner and company, flexible deal structures and speed with which a transaction can be completed. With higher capital gains taxes looming in 2011, now is a great time to evaluate this liquidity strategy.
Managing cloud computing risk using new products and services.
One of the primary concerns expressed by lawyers and other business owners when considering moving data and processes to the Cloud is risk. Understandably, business owners are wary of outsourcing confidential information and express concerns regarding the security of their data. Another concern involves the sense of lack of control over company data and the inability to monitor the software processes used to organize the information.
The “why” of a business venture, for Sinek, is not simply the act of making money; rather, it points more to a cause, vision or purpose. He says most of us in our daily lives are pre-occupied by the “what” and the “how” – but are not driven by “the why.” I think Sinek’s correct – we spend much of our time just “getting work done” and don’t remind ourselves of “why” we even care to do it.
I watched an interesting talk by Simon Sinek on what makes certain companies or people achieve greatness. To explain his thesis, Sinek makes a very important distinction in defining what it takes to achieve entrepreneurial success: some people know “what” they do, some people know “how” they do it, but few people consider “why” they do it.
There is a strong correlation between the electrification of industry, a hundred years ago and the cloud computing industry today.
In 2008 Nicolar Carr published a bestseller called “The Big Switch: from Edison to Google,” it’s central thesis being the strong correlation between the electrification of industry, a hundred years ago and the cloud computing industry today.
Firmex corporate clients are using their unlimited use virtual data room to share financial information with their auditors, setting up all their folders and documents online.
If anyone has ever had the pleasure of conducting a financial audit he/she is all too aware that it’s a time consuming process. The audit process has four main stages:
Environmental health is a growing global issue and demand for renewable energy is accelerating. Solar energy has grown at 30% per annum over the past 15 years while wind power grew close to 32% in 2009. As Firmex, virtual data room technology, becomes more cost-effective and easy to use, the software is increasingly useful to the renewable energy industry.
Over the last year, Firmex has been signing a significant number of renewable energy developers - in particular solar and wind energy. As the health of the environment continues to be a growing global issue, demand for renewable energy is accelerating. Solar energy has grown at 30% per annum over the past 15 years while wind power grew close to 32% in 2009. In 2008 some $155 Billion was invested in renewable energy up fourfold from 2004. Investment fell 40% in 2009 due to the economic crisis though experts expect that to rebound.
The process to take a new drug through pre-clinical and clinical trials is extensive. Since the Intellectual Property is so valuable and confidential, Life Sciences firms will generally limit the distribution of documentation in a secure virtual data room – they can watermark, restrict printing and save documents as required.
Many Firmex clients are Life Sciences firms developing new therapeutic medicines. What amazes me about this industry is the time horizon of 15+ years to take a drug from idea to market, costing millions, even billions of dollars. There are 3000-4000 early-stage research-driven firms funded by public markets or venture-capital that take on the technology risk of trying to develop new drug pipeline.
The recent advent of the kindle, the iPad and other paper eliminating devices serves as an interesting marker of just how archaic a practice it is to produce physical books for an industry as fast paced as M&A. Using a virtual data room to manage this process can accelerate the transaction process from the beginning, help manage costs and provide security measures that often fall through the cracks
Most of Firmex’s clients are now using the internet to distribute seller’s books or confidential information memorandums when managing a sell-side M&A transaction. However, there are firms that are continuing to create physical books, which can range from 50 to 200 pages. These books are typically distributed to a large number of potential buyers, particularly if an advisory firm routinely markets transactions to a database of private equity firms.
According to technology guru, Steve Blank, there are two types of risk for a Research and Development based company – market risk and technology risk. For example, technology risk applies to Life Sciences firms when they are searching for a cure for a terminal illness – it may take them 10+ years to prove the drug works. If they find the cure, however, there really is not a market risk; the product will be in large demand.
Recently, I have been reading Steve Blank (founder of 8 technology companies) on how to successfully take a technology to market. He has a tremendous blog with all his articles. Here is my summary of some of Mr. Blank’s key points.
In order to reduce the possibility of a recurring financial collapse, the SEC wants to bring greater transparency to the rating of structured debt products. The Firmex deal room offers arrangers a simple solution to comply with the SEC.
A common complaint by participants in the recent credit collapse is they did not understand what they were buying, rating or selling. Part of the reason for this lack of clarity is that the structured debt products CDO (Collateralized Debt Obligations) and related derivates products were themselves convoluted, consisting of large volumes of mortgages and other forms of debt which were aggregated and sliced into tranches with varying risk profiles.
Digital Rights Management, commonly known as DRM, refers to the ability to protect various types of electronic media. In recent years, DRM technology has become topical because of its role in protecting digital music and movies that make their way online. However, DRM also plays an important role in the financial transaction world offering security to those who share documents online in Virtual Data Rooms.
Digital Rights Management, commonly known as DRM, refers to the ability to protect various types of electronic media. In recent years, DRM technology has become topical because of its role in protecting digital music and movies that make their way online. However, DRM also plays an important role in the financial transaction world offering security to those who share documents online in Virtual Data Rooms.
Firmex’s unlimited use virtual data rooms expand the use investment banks have for their deal rooms exponentially; hasten deals to close and help avoid unnecessary risk.
In any deal, time is risk. The longer it takes to close a deal, the greater the potential for the transaction to get derailed. Being prepared ahead of time is one way to avoid time delays and risk.
A technical overview of recent data rooms and the speed enhancements for large transactions that are saving our clients considerable time and money when managing transactions with thousands of documents.
Because data room performance is important to our clients, we recently released the first wave of our new software architecture to address the growing demands of our customers.
The Due Diligence M&A process involves buyers and sellers of businesses connecting with other buyers and sellers to complete transactions. In today’s market place, the process of Due Diligence has been streamlined by collecting the information in digital format and sharing it online in a virtual data room.
In the business world, Due Diligence refers to the act of investigating information related to people and businesses. This can be on a voluntary basis as in conducting a background check on a future employee, or it can be a legal requirement as in investigating the legal issues around a corporate takeover bid. However, the most common type of Due Diligence performed in business typically relates to that which is performed in relation to a merger or acquisition (M&A). Read more…
Most virtual data room providers charge per dataroom, page, number of users. Which are the benefits of an unlimited use virtual deal room model? Why does such a model makes sense?
It has always puzzled me as to why virtual data room providers charge per data room or per page or total number of users. How can any company running a deal know exactly how many pages of documents they will have? Or how many users are going to access the deal room? Read more…
A traditional data room is a secure room where hard copies of corporate documents are kept for confidential review. Data rooms were primarily used for the sale of businesses. Prospective buyers would schedule time in the “data room” to perform comprehensive due diligence on the business or assets they were potentially buying. The buyer had [...]
A traditional data room is a secure room where hard copies of corporate documents are kept for confidential review. Data rooms were primarily used for the sale of businesses. Prospective buyers would schedule time in the “data room” to perform comprehensive due diligence on the business or assets they were potentially buying. The buyer had to travel (often fly) to the secure location. Then the buyer spends long-hours and often days sifting through thousands of documents. If there were more than one buyer, then each buyer would have to schedule certain days for “data room” or secure deal room access.
Over 250 financial and legal advisory firms are using their own, privately branded Firmex data rooms. Firmex-powered deal activity was up 255% in Q1 2009 versus a 10% decline in Q4 2008. According to Firmex’s M&A advisory clients, the increase is a result of sellers bringing deals back to market. The majority of the increase occurred late in Q1 2009, and the trend is continuing into Q2 2009.
