Before virtual data rooms became available, M&A teams created physical spaces that had filing cabinets that contained confidential documents and other information. They were costly, cumbersome to navigate and, worst of all, a sleep-deprived M&A analyst accidentally ignites his cigarette and sets the past 10 years of financial statements ablaze!
When you’re creating your data space begin by determining what information is essential to the due diligence process in your deal. You can then prioritize the most important documents to include or exclude. Avoid including irrelevant information because it can distract from important issues that will affect the future health of your business.
Then, you must decide how to organize your documents into subfolders and folders to create a hierarchical structure that is easy to follow. You could also think about indexing, which lets you tag files using keywords or metadata for locating documents based on their contents. Be sure that your files are labeled with short and descriptive names that accurately reflect their content. If needed, include dates and versions to track revisions to the document.
You can then upload your files into the data room to allow access for anyone invited to the project. Many providers allow you to assign users granular access rights so that they are allowed to download or view certain types of files without impacting the data access of virtual data rooms everyone else.
Once you’ve uploaded all of your files, a smart search feature makes it easy to find them and access them without leaving the data room. Some data rooms also have an inbuilt document viewer to provide an easy and quick viewing experience.