What Is the Purpose of a Data Room?

Historically, a virtual data room (VDR) was an actual location that offered access to confidential documents during high-risk business transactions like M&As or IPOs. Nowadays, virtual data rooms (VDR) provide a more convenient and efficient method to manage sensitive data. You can benefit from the convenience and security VDRs provide VDR can provide during major business deals, regardless of the size of your organization.

During the due diligence process, prospective investors will need to look over various documents pertaining to your business. This could include financial records and contracts, legal documents and intellectual property. You’ll also need to provide a list of customers and an analysis of competition. It’s also important to include a https://gooddataroom.com/how-vdrs-can-keep-deals-alive/ section that highlights the knowledge and experience of your team.

When you upload your files to the dataroom, make sure that they are organized and easy-to-navigate. Create a folder structure that includes main categories, subfolders and typical descriptions and names for documents. It’s also beneficial to group documents with the same subject to streamline the review process. You can further organize files by creating an overview.

Don’t include too much data in the data room, since this could be overwhelming and distracting for potential investors. Only share data that is important for the company. Similarly, do not provide unusual analyses that are confusing to the investor (i.e. sharing just the portion of the Profit & Loss Statement versus the entire picture). Make sure that the platform offers an option for investors to send an email or leave comments.