5 Tips for Better Due Diligence Data Rooms

a computer monitor and a keyboard on a desk

During the M&A process, it’s important to be able to present a holistic data room solution. As part of the due diligence process, the data room helps you establish an effective merger workflow. This impacts the buyer, seller, and legal representatives, in turn.

In the past, M&A transactions depended on physical data rooms during the due diligence process. Now, however, the virtual data room is the de-facto standard across varied industries. Of course, you want to ensure any virtual data room is effective, secure, and streamlined. Here are some tips that’ll help you ditch the physical data room and create a stronger M&A process.

1. Focus on document control

Throughout an M&A deal, it’s paramount that interested parties can share and access pertinent information as needed. You also need to leverage your online data room to secure and control sensitive files and folders. These often include financial statements, intellectual property information, sensitive documents, and confidential information. As such, even when you’re sharing with third parties, you need to maintain the highest confidentiality standards. A due diligence data room makes it that much easier to leverage enterprise security and encryption to protect your confidential documents.

2. Set granular access permissions


Dealmakers, investment bankers, and potential buyers all require different access to sensitive information and confidential documents. It’s also important that you’re able to update permissions in real-time and adjust access levels for required documents. Since your virtual data room is a secure space that houses sensitive data, corporate documents, and financial documents, you need to make sure you set permissions that prevent data from falling into the wrong hands. A virtual data room provider streamlines access details for mergers and acquisition deals compared to a traditional data room.

3. Regularly monitor activity

Whether you’ve recently added new users or you’re changing access levels and permission, you need to be able to track activity and gain insights as to how this impacts your M&A process. During the M&A process, you want to see when attorneys, advisors, buyers, and investment bankers interact with the necessary documents. A good virtual data room should allow you to incorporate page-level tracking. This means that you’re able to see who’s accessing which files and for how long. This helps you prepare for audits by creating data trails, which then helps attorneys, buyers, and the selling company maintain compliance throughout the sale. It’s also a good idea to invest in a virtual data room incorporating IP tracking and analytics.

4. Prioritize a robust cloud infrastructure


When selecting a virtual data room, it’s important to prioritize services that integrate with robust cloud infrastructures. All the security features and access levels won’t mean much if you lack data room reliability. You want to ensure that your virtual data room service enlists high-capacity servers with hot-swappable server components. This enhances reliability and prevents major bottlenecks during your M&A process.

5. Opt for ongoing service and support

Ideally, a good virtual data room service is easy to set up and won’t require much training to use. However, that doesn’t mean that your VDR will always perform perfectly. Even in streamlined technical systems, human error and technical mishaps can still stall your processes. When you have issues accessing the necessary documents, ensuring digital rights management, or maintaining different levels of access, you want to have VDR support on hand to help you overcome these hurdles. It can make a major difference for the selling company, potential investors, and involved law firms.

From document storage and data exchange capability to added security functions, choosing the right virtual data room provider is important. With easy file management and an intuitive dashboard, it’s simpler to tackle different projects and M&A deals.

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