Choosing the Right Data Room for Due Diligence

A virtual data room to conduct due diligence can help accelerate deals by providing a convenient way to share documents without the risks that come with sending sensitive information via email. How can founders pick the best tool for their needs and ensure that it is the correct one? Choose a vendor that provides a range of secure, robust tools for managing due diligence documentation – not just storage capacity but also permissions settings, auditing capabilities, watermarking and more.

A data room is usually used to manage due diligence. It can be utilized for M&A, but also fundraising or equity transactions, or in business restructuring and bankruptcy procedures. Due diligence typically entails reviewing business-critical information that, if leaked could have a negative impact on the reputation or financial health of both parties.

A good quality data room can enable users to set permissions at document and folder level so that a particular group of users have access to specific information. The data room solution should also provide a suite reports on user activity, to enable administrators to keep track of tasks, Q&A threads and document uploads and reads.

The right software for data rooms will also allow users to design a flexible folder structure that suits each due diligence project. A good virtual data room can allow users to create personal notes to documents that are only visible to them and not viewable by other data room users.