What Is the Purpose of a Data Room?
www.gooddataroom.com/how-vdrs-can-keep-deals-alive/
Historically, a virtual data room (VDR) was an actual location that offered access to confidential documents during high-risk business transactions, such as M&As or IPOs. Virtual data rooms (VDRs) are an efficient and cost-effective way to handle sensitive information. Regardless of the size of your company you can benefit from the security and ease of use that a VDR provides during critical business deals.
During the due diligence process, prospective investors will need to look over various documents pertaining to your business. This could include financial records, as well as legal documents, contracts and intellectual property. You’ll also need to provide a list of customers and an analysis of your competitors. In addition, you need to prepare a section that showcases your team’s experience and expertise.
When you upload your documents to the data room, make sure they’re organized and easy to navigate. Create a clear folder structure with main categories and subfolders that are standardized with document names and descriptions. It is also beneficial to group documents that are on the same subject to simplify the process of reviewing. You can further organize your documents by creating a master index for guidance.
Don’t share too much information since it could overwhelm and distract potential investors. Make sure to share only the data that is essential to the business. Also, don’t present unorthodox analyses that can confuse investors (i.e. sharing only an element of a Profit & Loss statement as opposed to the whole picture). Also, ensure that you provide short messages or comments integrated into the platform so that investors do not have to leave the data space to contact you.