Tips for Using a Virtual Data Room during an M&A

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During the M&A process, every interested party must do their due diligence to encourage a smoother, streamlined sale. Mergers and acquisitions require the utmost security, care, and professionalism. While previous due diligence processes included the physical data room, many brokers, buyers, sellers, and third parties find that virtual data rooms offer a much more robust workflow.

It’s easier to access and track confidential documents, group sensitive information by folder, and assign M&A roles, responsibilities, and permissions. So whether you’re preparing to meet with investment bankers or you’ve just started researching virtual data room providers, here are ways to leverage the virtual data room for M&A.

Ditch the traditional data room.


At first glance, the physical data room often seems simpler than the virtual data room. With a traditional physical data room, the seller often hosts potential buyers and interested parties in their office or place of business. However, the data room is just that: A physical room. This data room houses confidential documents, account information, and intellectual property. Buyers, sellers, and bidders can meet in the data room to negotiate, review confidential information, and settle the terms of the M&A transaction.

While this older data room model still positively impacts both startups and enterprises worldwide, it’s less immediate, effective, and engaging than the virtual data room. It’s also, commonly, less secure. Switch to an online data room ahead of your M&A to create a stronger sales process.

Thoroughly vet your provider.

Though many startups might not need the additional functions and controls of a more modern virtual deal room, enterprises require all the tools they can remotely access. That’s why it’s important to find a virtual data room solutions provider that offers industry-leading features like dynamic watermarks, intuitive Q&A tools, and ease of use. Also, when you’re looking at virtual data room solutions and virtual data room software, you want to choose a provider that gives you full control.

After all, when you’re handling intellectual property and wrangling law firms, business representatives, and other dealmakers in the deal room, you want to have granular control over access to sensitive documents. Virtual data room services that don’t have robust permission settings often don’t lend themselves to overall confidentiality.

Set tailored permissions based on users and groups.


Once you’ve found a data room provider that offers a virtual data room solution balancing expense and efficacy, you’re going to want to tinker with that virtual data room service a bit. Depending on your VDR provider or the length of your free trial, your strategic partnerships can help you determine user permissions for potential buyers, bidders, and brokers. Again, you want complete control over confidential files and individual documents, whether financial institutions or private equity firms review them. Since you may also be working across various industries, you’ll want a collaboration tool that facilitates secure access to this controlled environment and tracks user interactions.

Your user permissions give you valuable data for across-the-board communication. You can limit which VDR users can upload and download files, who can access financial statements, and who can view what level of sensitive data. These granular controls make it easier on the entire M&A process without sacrificing quality or security. By using the right virtual data room, you’re able to account for who accesses important information and when they do so.

Virtual data rooms are a must.

Legal firms, consultancy firms, and other participants can benefit from the structure of the online deal room. With a secure platform and effective digital rights management, it’s easier to tailor access to specific documents, spreadsheet information, and confidential data. This helps mergers and acquisitions proceed smoothly without the common security hangups.