Selecting Data Room for Due Diligence

Traditionally the process of preparing for due diligence required plenty of time and effort. Auditors would be physically present in the offices of the company and go through file after folder of financial documents for a number of days. Due diligence is a vital element of any transaction, and can be difficult when sensitive data is involved. With the proper virtual data room software however, this process can be much more efficient and convenient.

Choosing a due diligence data room provider can be a challenge due to the fact that different providers offer different pricing models and functionality. Start a trial free of the provider and request for their checklist of due diligence. This will help you create an organized file structure prior to time and make sure that you don’t overlook any crucial information.

The selection procedure should include a comparison between the different providers’ ability to meet your specific industry’s due diligence requirements. This is especially important for M&A capital raising, IPOs, and divestiture projects, where a broad variety of documents are shared. For example deals in the energy industry usually involve transferring seismic data and well logs, whereas renewable energy projects require sharing plant data.

Choose a virtual space which has features that facilitate collaboration with teams from around the globe. It should support standard file formats and allow seamless uploading and downloading. It should also allow users to connect remotely, track activity and provide a complete audit trail. It should also have features such as remote shredding, and automatic watermarking.

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