A virtual data room for mergers and acquisitions can help streamline due diligence. It will eliminate the need for document photocopying and indexing, as well as lots of costs associated with travel with physical rooms. It can also make it easier to find information by offering the ability to search for keywords. Furthermore, it will allow bidders to conduct due diligence from any place board software providers around the globe.
A VDR allows you to control access for users and provide an audit trail of the activities that help companies meet the regulations. A company could, for instance, limit access to specific folders. For instance, one that displays details of employee contracts. The information is only accessible to HR and senior management. This is important since it can prevent the accidental disclosure of private information that could cause damage to a deal or lead to a lawsuit, says Ross.
VDRs also help reduce the risk of data breaches, which is one of the top concerns for M&A participants. According to a study conducted in 2014 by IBM the human errors are the primary reason for data breaches in 85% of instances. However, a virtual data room can help reduce the risk of a breach by encryption every piece of information and employing a variety of security measures including two-factor authentication, multiple firewalls, and remote shred.
It’s worth the effort to sketch out your ideas for your ideal VDR structure before starting the M&A process. This can be as simple as sketching it out on paper or as detailed as a sketch using a graphics editing program.