A data room is an online repository that allows users to share confidential business data, like during M&A deals due diligence, and other high-stakes processes. It is an encrypted cloud-based platform that authorized parties can view and access documents, even without the requirement to travel to a physical location. The most secure M&A rooms are equipped with a range of security features that ensure the integrity, confidentiality and security of data.
The most typical use for a virtual data room is in the due diligence process of M&A deals. The reason is that both sides of a possible deal need access to large quantities of confidential records and documents to assess the risk and value of the transaction. Virtual data rooms allow buyers quickly review these documents, making the DD process quicker and more efficient.
A well-organized structure for folders will help prospective buyers to locate the information they need. Create folders for each area of an organization’s operations including financial information as well as legal documents and contracts. Label these folders clearly with standard document names and include an index to guide you. This arrangement can also simplify the DD by eliminating redundant documents and reduce the amount of time required to review each document.
Depending on the size of a company and the complex nature of its transactions it is possible to limit access to certain documents to a specific group or individuals. For example, a human resources folder containing the details of contracts for employees should not be shared with any departments other than the HR department and the senior management.