What Are Data Rooms?
When you’re selling your business or making preparations for a fundraising round, the virtual data rooms help you keep sensitive information in one location with access granted by the administrator. You can upload documents and files that can then be shared with potential investors or the buy-side for review – improving efficiency and speeding up the due diligence and deal-making process.
A data room is usually utilized during the M&A due diligence process, with both sides reviewing business-critical documentation and negotiation of the terms of the deal. However, you can make use of a data room in equity and funding transactions, legal proceedings or any other business transaction where you must share sensitive information.
The majority of data rooms have a variety of templates you can customize according to the type of transaction you are carrying out. This allows you to build folder structures with document names that are relevant to the task and helps users to locate what they need. For instance, you can create a folder named ‘financial information’ and subfolders for documents such as accounting reports or contracts.
A reliable VDR solution comes with a variety of tools for reporting that will help you monitor and track the usage of your data room. This is especially important after your data room has been opened up to a third party, as it provides transparency and accountability regarding who has uploaded which document and when. Choose a provider that offers this kind of reports in addition to ongoing technical support and account management, typically available 24 hours a day/365 days a year.
