More Than €300 Million Is Wasted Every Year Due in Europe to Inefficient Due Diligence

September 16, 2014

According to the secure cloud experts Drooms, 300 million euros are wasted every year in Europe due to poorly conducted and inefficiently managed financial transactions.

The M&A market is starting to accelerate and grow once again. A survey of the German market by Ernst & Young showed that acquisitions in the first half of 2014 reached their highest value since 2008. The real estate market is also once again growing. But if all of these financial transactions, including mergers and acquisitions, commercial property deals, and syndicated loans are conducted inefficiently, any gains will be negated by adding a layer of additional costs which, at the time of this writing, Drooms estimates to be over 300 million euros. 

“On average, a total of 40 people from both the buy and sell sides are involved in the due diligence process,” explains Jan Hoffmeister, managing director of Drooms. “The largest group within due diligence specialists is usually comprised of lawyers. They spend the most time in data rooms by far and must be put in a position where they are able to work as efficiently as possible.”

The fact that this is not currently the case has become clear to Frank Goerlitz, managing director at DG Partners consultancy firm in Munich. “We use many different data rooms when we support our clients throughout projects,” he says. “It was recently the case that it took over one minute to open an 85-page black and white document. If we only have access to view and not print, it is extremely difficult to wade through the 10,000 or 20,000 pages that might be stored in a data room under such conditions. If you consider that we can conduct due diligence on about 100 companies through virtual data rooms every year, then speed matters.”

The specialists who deal with the details of the transaction in the data room are highly paid professionals. If they are unable to work efficiently, as in the example given above, the expense added to an individual transaction can quickly escalate to tens of thousands of euros.

Modern virtual data rooms such as Drooms provide companies with efficiencies transaction processes that result in crucial competitive advantages. Drooms Instant Access Technology combines effective speed in handling documents with transparency and security.

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