A data room allows companies to exchange sensitive data safely during business transactions and also simplifies complicated procedures. Whether you’re preparing to raise capital or planning to make an acquisition, an organized virtual environment can expedite due diligence and lower the chance of misuse of information.
Your data room should contain more than just the essentials such as a deck, cap-table, and term sheet. It should also contain detailed financial records as well as projections of revenue IP ownership documentation, along with other key details that help investors comprehend the growth potential of your business. These documents will boost confidence of investors, boost due diligence and increase your chances of closing a deal.
Make sure your data room is easily navigable by including an index or table of contents document with hyperlinks to various sections. It’s also important to clearly label folders as well as documents with consistent, descriptive titles to ensure they are clear to those who visit the data room. Don’t share non-standard analyses (e.g. just presenting the portion of a Profit and Loss statement) since this could mislead potential investors.
It’s important to review and update your data room content regularly. This will increase transparency and accountability while decreasing the possibility of accidental disclosures. Regular reviews can provide valuable information about user activity within your data room, like who accessed which files, and when. This information can be useful for compliance. Consider putting watermarks on any documents you plan to share outside of your dataroom to decrease the chance of theft or modification by someone else.