A virtual dataroom for mergers and purchases can help streamline due diligence. It eliminates the requirement for photocopying of documents, indexing and travel costs associated with physical data rooms. It also makes information more accessible through the use of keywords. It can also permit bidders to conduct due diligence from any location in the world.
A VDR can be used to control access for users and provides an audit trail of all activities which allows companies to meet the regulations. For example, a company can limit access to certain folders, such as those that contains details of employees’ contracts, ensuring board software providers only the senior human resources and management have access to that information. This is crucial because it prevents accidental disclosures of private information that could cause damage to a deal or even lead to a lawsuit, claims Ross.
VDRs also help reduce the risk of data breaches. This is one of M&A participants’ biggest concerns. IBM’s 2014 research found that human error was the primary cause of 85% of data breaches. However the use of a virtual data room can limit the risk of a data breach by encrypting all data and employing a range of cybersecurity practices including multiple firewalls, two-factor authentication, and remote shred.
It’s worth the effort to sketch out what you think of as your ideal VDR structure before starting the M&A process. It could be as simple as a rough sketch in an old piece of paper or as precise a diagram created with graphics editing software.
