Unlocking the Power of Data with Data Room for Due Diligence

Data Room for Due Diligence

The virtual data room has been successfully used to facilitate the due diligence process during an M&A transaction, loan syndication, or private equity and venture capital operations.  In the M&A process, a data room is created as part of a central repository of data about companies or divisions being acquired or sold. The data room allows stakeholders to view business-related information in a controlled environment where privacy can be maintained.

What Are Virtual Data Room Solutions?

The Virtual Data Room constitutes an electronic tool that securely stores and makes downloaded documentation available. Quite often, data rooms for sensitive information are used as secure collaborative nodes to assist in the due diligence process of an M&A transaction. Other use cases include capital raising and asset management. With cost, efficiency, and security advantages, these effective platforms have replaced physical data rooms as a means of exposing critical information during the due diligence process.

Sometimes, exchanging important documents can be nerve-wracking for a business, especially if the deal doesn’t work out. So, in case the deal is not closed, companies can easily revoke access to their VDR software and keep their documents completely safe. While we usually associate the use of online data room software programs with the financial services sector, especially asset management, joint ventures, mergers and acquisitions, many industries are now using virtual data rooms in their daily operations to meet their data needs.

To attract investors, it is necessary to correctly present the project. As a rule, the investor is interested in financial statements, tax cleanliness of the company, and all that jazz. How to share confidential information with a possible partner? How to protect your intellectual property from intruders? The Internet Data Room solution will help you with this. Working in the platform looks like this:

  1. The necessary documents are loaded into the system.
  2. The authorized person is given a login and password to access the system.
  3. The user sees only those documents that are intended for him or her, and access to all other folders is closed.
  4. The user account is either disabled at the discretion of the administrator or retained (if the user is allowed to re-access documents).

How Is Security Guaranteed in the Virtual Data Room?

  • Careful setting of access rights of company employees to confidential information;
  • The ability to encrypt and protect downloaded data from downloading and copying;
  • A multi-level security system prevents unauthorized access and hacker attacks;
  • The system allows you to track any user activity, which minimizes the risk of “leakage” of information.

Why Use the Electronic Data Room?

Virtual Data Room is a product of combining elements of a web content management system and a document management system. Using a data room for due diligence allows you to maximize the productivity of your organization’s employees. Thanks to the use of electronic document management, several employees can work with the same document at the same time. Besides, due to the platform, there is no need to work for many hours in the archive to find the necessary documentation of the organization.

As a rule, a virtual data room allows you to either avoid hiring additional labor, for example, in accounting or reduce the existing staff. It should be understood that with an increase in the speed of the work of employees, you will significantly minimize the number of errors made.