Over the last 15 years, Virtual Data Rooms (VDRs) have become one of the fastest growing and most powerful tools in computing software. They have stripped away all roadblocks between place, time and location, by bringing people together all over the world.
With the need for VDRs growing as time goes on, it’s no wonder that the VDR market has seen an upwards of $800 million in revenue over the past few years. The market for VDRs is at a steady increase and predicted to keep growing.
VDRs are online data rooms, much like a library or hall of records. Before computers and the internet was so popular, rooms full of filing cabinets were used to physically store all legal and confidential documents. To find a document, you’d have to look through cabinets, files, shuffle papers and hope that the person who used it last put it back where it belonged. This was a huge waste of time for everyone. Hours could easily be spent without ever finding the document that was needed. Even worse, if a fire or other natural disaster struck the room, everything could be lost within minutes.
With time, advancements in technology were made and VDRs became a reality. Thanks to VDR technology, the need to physically store paper documents has decreased significantly and almost been abolished. With the world moving towards a paperless future, one with more renewable resources and eco-friendly, it makes sense that bigger companies are moving online.
Not only do VDRs help to reduce time waste, and are eco friendly, it’s also a more secure way of storing data. As more advancements in technology are made, the security and efficiency of VDRs only improve.
VDRs are a priceless means for helping companies to deal with mergers and acquisitions, due diligence, and other processes containing sensitive information. The main purpose of any VDR is to keep, organize and share the most valuable data during a deal in a secured location.
Being able to see who has viewed a document with an audit trail takes away all of the guesswork. M&A teams can use VDR tools as a way of discovering what their clients are most interested in.
From the buy side, you are able to examine all the documents to help predict any future risks, pitfalls, and trends.
VDRs have revolutionized the transaction process in today’s business environment. With cloud-based technology, you can get instant access from any location, and on any device with internet access. Secure data management and storage saves a large amount of time and money. VDRs have evolved to become a tool that helps facilitate an entire deal and not just perform due diligence. While VDR is used for M&A, it’s also widely used for loan syndication, private equity, and venture capital across many different industries.
In 2016, over $800 million in market revenue was made from about 240 VDR providers. IBIS World’s 2016 report shows an average of 13.7% annual growth from 2011-2016. 73% of that revenue was made from the 4 largest firms in the market. Even with a small number of firms making up a majority of the market, small firms are still doing quite well.
Smaller firms are staying relevant by providing more niche solutions and with the continued use of VDRs, predictions estimate annual growth of VDR providers to be 12%. With the predicted growth and use of VDRs, it's feasible to expect an increase in investments for VDR technologies.
In January 2017, IntraLinks was acquired by Synchronoss Tech for $821 million. With companies and corporate conglomerates continuing to express interest in investing in technology solutions, the VDR market is given a promising opportunity for growth.
While the needs for technology are constantly changing and different sectors find themselves in a constant battle of ebb and flow, the VDR market seems to only be growing. With constant improvements being made to tailor to company needs, it leads to a promising future for the VDR market. In fact, the global VDR market size is expected to grow to 1,895 million by 2022. The increase in business data from M&As is expected to drive the growth.
Learn more about DealRooms's innovative virtual data room designed for modern M&A today.