Survey Indicates High Expectations

NEW YORK, NY, NOVEMBER 01, 2010 — Executives are increasingly more optimistic about deal flow in Q4 2010, according to polling data commissioned by Merrill DataSite, the leading provider of virtual data room (VDR) solutions for business communication and information management and gathered by peHUB.com, the leading information website for private equity professionals. The data revealed that almost half (48 percent) of those polled believe, as it relates to private equity transactions, that there will be an uptick of 10 percent – 50 percent in deal flow compared to Q4 2009.  Moreover, 21 percent of those polled think that deal flow will increase up to 10 percent in Q4 2010 vs. Q4 2009.

In addition, respondents are cautiously optimistic about the number of deals that will be completed before the end of the year, with almost a third (28 percent) of those polled expecting 25 percent – 50 percent of deals in the pipeline to be completed before the start of 2011. Conversely, 44 percent expect anywhere from 0 percent – 25 percent of their clients’ deals to be completed in the same time period.

“The results bolster what Merrill DataSite has experienced firsthand in its VDR business throughout 2010; an increasing level deal flow activity coming out of the private equity shops.  There appears be a real sense of urgency to empty the deal pipeline by the end of the year; more so than we’ve seen in recent history,” said Richard A. Martin Jr., Senior Director of Merrill DataSite.

Respondents cited a variety of factors as the main drivers behind deal flow in Q4 2010. The majority of those polled (40 percent) believe that year end tax changes will be one of the biggest factors driving deal consummation in the end of 2010. Slightly more than one quarter (26 percent) cited private equity overhang, or the need to put funds to work, as a main driver of deal flow in the final quarter of 2010 as well.

Mr. Martin added, “It is well documented that the dearth in deal activity during the past few years has put a lot of private equity firms at risk of having to return capital to investors, not something they’re used to doing and certainly not motivated to do.  We also believe that tax changes related to carried interest has caused firms to be much hungrier for rapid conclusions to transactions than in recent memory.”

Additional data points revealed that 30 percent of those polled think the main reason companies will not do deals in Q4 is due to a deal being overpriced because of equity overhang or too much competition. Moreover, 49 percent of respondents, and/or their clients, will not be doing deals because company earnings are unsustainable.

“Obviously, the economy is not on firm footing yet,” said Jim Beecher, publisher of peHUB.com, a property of Thomson Reuters. “So while there’s enthusiasm about deals picking up steam, there’s still a pragmatic view that firms need to proceed cautiously.”

Responses were drawn from survey questions posed during a peHUB.com webinar called, “The 2010 Year End Deal Crush: Inking Deals As The Market Heats Up.” An average of 67 people responded to each of the four polling questions asked during this webinar.

For more information on Merill DataSite please visit www.datasite.com.

About Merrill DataSite
Merrill DataSite™ (www.datasite.com) is a comprehensive virtual data room (VDR) solution that accelerates the due diligence process by providing a secure online document repository for confidential time-sensitive documents. Merrill DataSite overcomes the many limitations of a traditional paper data room by enabling companies to present critical business information to multiple prospective buyers in a secure Web-based environment. As a result, transaction time and expense are dramatically reduced. Merrill DataSite can be rapidly deployed and is accessible by viewers throughout the world via the Internet. As a leading provider of VDR solutions worldwide, Merrill DataSite has empowered nearly 2 million unique visitors to perform electronic due diligence on thousands of transactions totaling trillions of dollars in asset value. Merrill DataSite is the first VDR provider to understand the customers’ and industry’s need to provide the highest level of security by obtaining an ISO/IEC 27001:2005 certificate of registration, setting the standard as the world’s only VDR certified for operations in the United States and Europe.

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