A virtual dataroom for mergers and purchases can help streamline due diligence. It can help eliminate photocopying of documents and indexing, and a lot of the travel costs that are associated with physical rooms. It also makes information more accessible through the use of keywords. It also allows bidders to conduct due diligence from any location around the globe.
A VDR lets companies comply with regulations by modifying access to users and supplying an audit trail. A company can, for instance, limit access to certain folders. For instance, one that displays the details of employee contracts. This information is only available to senior management and HR. This is important as it can prevent the accidental disclosure of private information that could cause damage to a deal or result in an action in court, says Ross.
VDRs also help reduce the risk of data breaches which is among the top concerns for M&A participants. According to a study conducted in 2014 by IBM the human error is the reason for data breaches in 85% of cases. However an online data room can help reduce the risk of a security breach by encrypting all data and employing a variety of security measures that include multiple firewalls, two-factor authentication, and remote shred.
It’s worthwhile to sketch out how you envision the VDR structure prior to beginning the M&A process. This could be as easy as sketch on a piece of paper or a more detailed diagram created using a graphics editing program.