How to Create a Data Room for Your Business
Often selling a business requires sensitive documents and data be shared among multiple buyers. Virtual data rooms are the ideal solution for those looking to sell their business or needs to securely share sensitive information. A data room, also referred to as a due diligence virtual dataroom can provide the secure distribution and control that you need to conduct your transaction.
Requests for investor data are made throughout the entire deal flow process but tend to occur in two phases: Stage 1-data needed to create the term sheet (e.g., financial models, product-market fit and cap table).
Stage 2 detailed due diligence requests (e.g., security-related docs, material agreements, and more).
When designing a data room take into consideration that investors are looking for efficient and easy navigation through the documents and data. To accomplish this, think about having a comprehensive list of required documents and a logical arrangement to make it easier for investors to locate what they are looking for. One way to accomplish this is to use metadata, folders and the use of a consistent naming convention for documents.
Another key tip is to avoid sharing a fragmented or unorthodox data in the data room. This can be confusing to investors and show that you are not knowledgeable about your business. Include only the relevant information to your company and eliminate documents that are no longer valid. This will help you save time and ensure that all parties have access to the most current and accurate information.
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