Virtual Data Room Setup for a Due Diligence

You’ve heard about all the benefits a virtual data room brings to deal-making, but you don’t know how to use it? Fear is justified because the new system requires time for you, your employees, and the third party to adjust to it, but there is nothing complicated about this one. In this article, we’ll tell you how to set up a VDR in just a few steps and start using it right away.

Step -1: Choose a worthy VDR vendor

A lot will depend on your choice. You need to make sure that your investment pays off and your data room can serve its purpose. This might be difficult since there are many options on the market, but you need to stay focused on the features and needs of your company so you do not go wrong. Once you have selected the options that meet your requirements, you can study their reviews, highlight the pros and cons of each, and be sure to contact the suppliers to find out more about those or other issues.

Be sure to clarify questions about pricing, customer service, security, and interface (it would be best if the provider could demonstrate how to use the interface himself). Once all the issues have been discussed and you have successfully made the purchase, you need to start setting up the room and inviting users there.

Step – 2:Decide which data rooms you want to use at which point

Some companies prefer to use separate data rooms for different stages of the transaction. This can be roughly divided into a pre-information room – for the early stage of the deal, and a room with highly confidential information that only a select number of users will be able to see. The most important thing for you is to know your needs in advance to further optimize the transaction.

Step – 3:Follow the due diligence checklist

When your company goes directly to the M&A stage, investors will provide you with a due diligence checklist. This will make it easier for you to prepare and organize all the necessary data and correct any potential errors. This checklist will also give you an idea of how best to structure this list of documents so that they are easy to review.

Step – 4: Create and organize a data room with a file structure

Having the right structure and organization of files also helps speed up the transaction process. An intuitive interface, proper naming and indexing of files according to a checklist, and a smart search feature greatly improve the review process for your investors.

Step – 5: Set access levels, permissions, and security settings

In this step, you have to provide permissions for each of your stakeholders and this needs to be done very carefully, below we will talk about the factors to consider while setting up your VDR access:

  • Access Control – you need to decide the principle behind your access control, maybe you only want to grant file permissions to certain users, maybe you only want to block a certain domain
  • Printing and uploading – you can forbid other users to interact with the document except for viewing, and allow only certain people to do so
  • Adding watermarks and access agreements – you can watermark your most important documents to protect them from being copied and stolen. Some VDRs even have a feature to provide access agreement terms, and other users have to agree to them before they can view the documents