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Choosing a Virtual Data Room for Due Diligence

When businesses work with partners to develop structures, produce products or offer services contracts, data and documentation are often shared. Virtual data rooms allow businesses to share their data without risking breaches or violating compliancy standards. They make it easy for everyone to access, review, and redact the data.

M&A due diligence is one of the most common applications for VDRs however there are other instances as well. Private equity companies and funds use VDRs to share portfolio information, tax information and documents regarding fund investments with investors. Investment banks can also utilize them to help with the buy and sell sides of a financial transaction by assisting in the preparation of documents due diligence and contract review.

During due diligence, the integrity of the VDR is vital to the success of the deal. If you’re sharing a VDR with another third party for M&A or capital raise, you must ensure that the provider has a proven track of reliability and support. Request that your vendor provide you with uptime and downtime reports and compare them against other providers.

In addition, consider the quality of the user experience. Choose a vendor that offers user-friendly features such as drag and drop for bulk uploads of files along with at-a-glance reporting, as well as customizable templates for internal meetings. Also, ensure that the client service representatives of the vendor are familiar with the specifics of your company and have experience in supporting processes similar to yours. This way, they’ll be able to provide quick and efficient assistance throughout the process.

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