When people think of data rooms for due diligence, they think of mergers and acquisitions which involve companies sharing information with other parties in a controlled manner. Due diligence data rooms are also used by lawyers to prepare cases or communicate with co-counsels or opposing counsel during litigation proceedings. Investment bankers can make use of these rooms to share confidential information during capital raising or IPO preparation with potential investors and underwriters.
When using a virtual information room to conduct due diligence, it is crucial to ensure all files and documents are ready and uploaded ahead of inviting third parties into the portal. Usually, a period of preparation is required, which can help you organize and upload your documents in a structured way without the pressure of deadlines. Once the main due-diligence process has begun, users can set specific permissions for access. They can also suspend or revoke access to folders and files at anytime.
The folder structure of a dataroom for due diligence should be logically organized, with a name that is clear and concise for every document or file. A well organised folder structure can help users to locate the information they’re looking for. It is also beneficial to include the search function to give quick access to documents. Certain VDR providers, such as FirmRoom offer templates for diligence folders which can be uploaded to create an automatically logical and a user-friendly directory.