Historically in the past, a virtual data room (VDR) was a physical space that offered access to confidential documents for high-risk business transactions like M&As or IPOs. Nowadays, virtual data rooms (VDR) provide a more convenient and cost-effective method of managing sensitive data. Regardless of the size of your company you can take advantage of the security and comfort a VDR offers during crucial business deals.
During the due diligence process potential investors might want to read a number of documents pertaining to your business. This could include financial records, as well as legal documents, contracts, and intellectual property. You’ll need to include a list with your clients and a competitive analysis. Additionally, you must create a section that highlights the experience and expertise of your team.
When you upload your files to the dataroom, make sure that they are organized and easy to navigate. Create an organized folder structure that contains main categories, subfolders and normal descriptions and names of the documents. To simplify the process of reviewing it is helpful to categorize documents that are linked. You can further organize your documents by creating a master index to provide guidance.
Do not include too much information because it could overwhelm and divert potential investors. Make sure to share only the data that is important to the business. Similarly, do not provide unusual analyses that are confusing to the investor (i.e. sharing just one portion of the Profit & Loss Statement versus the entire report). Also, make sure you include short messaging or comments integrated into the platform so that investors do not have to leave the data space to reach you.