How to Set Up a Virtual Data Room

A virtual data room is a safe platform that allows companies to collaborate and review documents. It is a common tool for M&A and strategic partnerships. The most important part of setting up a virtual data room is determining the type of information you’ll be sharing, and making sure that all files are in order.

Begin by creating a document and document structure that is a reflection of your due diligence checklist. This includes folders for legal documents, contracts, financial statements and due diligence materials. Use consistent and clear naming conventions and tag the files with metadata to make it easy for anyone to find the information they need quickly. Make sure that you upload the most recent version of each document and remove the older versions from the dataroom.

Then, assign groups of access to each document and file based on the requirements of the people using it. Management, for example, may require access to the room. Potential investors, however need to have access to all financial documentation (balance sheets and income statements, for instance).

A central repository for all your documentation is vital to an efficient transaction. But, it is equally important to have a robust security system to prevent unauthorised access. You should choose an organization that provides multi-factor authentication as well as user security impersonation, as well as the ability to set a timeout session that can be used to limit access and safeguard valuable information. Ask the VDR vendor for information on their customer support. You need to know that the team will be available to you anytime to address any questions or concerns.

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