• Growth reflects economic turmoil and increase in specialised private equity funds
• Virtual data rooms allow transactions to be completed quickly and efficiently to meet short deadlines

London and St. Paul, MN — The credit crisis is fuelling a boom in distressed asset transactions, according to Merrill Datasite®, the acknowledged leading global provider in virtual data rooms (VDRs).

A study commissioned by Merrill DataSite® reveals that 10 percent of its VDRs – online versions of traditional “paper rooms” for due diligence – in 2008 to date have been used to manage distressed sales. This amounts to several thousand projects.

This increase in distressed asset transactions taking place via Merrill DataSite® VDRs comes as economic problems worsen and high-profile distressed transactions – such as Barclays Capital’s acquisition of parts of Lehman Brothers’ US operations – hit the headlines.

Banks and private equity firms are increasing their investment in distressed assets. In May, Standard Chartered Bank predicted that Asia alone would attract $10 billion of new funds in the next 12 to18 months to invest in distressed assets.

Major private equity funds have already been closed this year, including a $10 billion distressed asset fund from Oaktree Capital Management. Earlier in September, TPG Capital closed on $30 billion in new funds, an undisclosed amount of which it earmarked to invest in distressed assets.

“Given current market conditions, many institutions and funds see distressed assets as a good investment opportunity with potentially better returns than more traditional investments,” said Ed Bifulk, president of Merrill DataSite®: “The growth we’re seeing in distressed transaction-related VDR activity is another indicator of how the market has changed in the past twelve months and how VDR technology can empower companies to more quickly and effectively respond to dynamic market conditions. Distressed transactions typically work to extremely short deadlines, and VDRs enable sellers to quickly and efficiently connect with buyers online, anywhere in the world, at any time.”

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Patrick Evans / Peter Marcus - Citigate Dewe Rogerson
Tel: +44 20 7282 2913

Merlin Piscitelli - Director, Merrill DataSite®
Tel: +44 917 761438