Using Virtual Data Rooms to Streamline Due Diligence in M&A

Streamline Commercial, Legal, and Operational Due Diligence

Virtual data rooms have revolutionized M&A by reducing the chance that physical documents could be damaged or lost. They also accelerate the due diligence process and encourage value creation. The key to ensuring your VDR can provide these advantages is to set it up correctly by data management choosing the best provider, setting up an appropriate folder structure and inviting users who are authorized to use it. Once the VDR is in place and the search function has been activated, it will become your digital scout and unearth information in the complex folder structures.

Create your VDR by investment due diligence categories such as governance, finance, intellectual property, real estate, HR, and litigation. Sub-folders can be used to organize your data and to create an index that is easy to use.

Remember that VCs, and other stakeholders with whom you communicate are likely to require your documents to be in an appropriate order. In the event that you upload a version that is not up to date, it could damage the trust of your investors, and even sabotage the deal.

Select the VDR with role-based control (RBAC) for managing permissions for documents. This will protect you from accidental or malicious actions from unauthorized individuals.

The VDR should also allow users to download only the data they require. Watermarks, access expiry dates and limit on size of files can all be used to limit exposure of sensitive information. The VDR should include an extensive audit trail to ensure that you can see what files each user has viewed. This increases trust and accountability among all participants.