The due diligence process is important in making business transactions available to entrepreneurs. Today, due diligence can be performed using traditional document collection methods or the modern automated method of providing a virtual data room for due diligence.
Most businessmen choose the automated document collection method for due diligence because it saves time and allows them to enter a new era of business. Today we will tell you how to achieve it from a virtual data room.
Why not use free due diligence solutions?
Data room software is an advanced storage solution that allows you to store all the corporate files and documents required during academic work. You can also say that you are currently using some kind of file storage solution that provides cloud-based solutions. You are probably using a per-user solution like iCloud or Google Drive. The disadvantages of its use could be listed endlessly:
- These products are invented exclusively for individual users, they simply cannot help in a business transaction in which there are a lot of documents.
- Popular solutions are frequent targets of hackers. Furthermore, hackers often break into precisely these solutions.
- Poor security, which should only cover individual requests. A Google Drive or iCloud solution simply cannot cover all corporate requirements. Only a virtual data room can do that.
As you can see, the virtual data room is a super secure business solution for in-depth analysis, exclusive to each company.
Steps to create a VDR for Due Diligence
You should follow these instructions if you want to create a fully functional virtual data room and prepare it solely for the due diligence you are preparing for.
The first step. Select the data room you need
Most companies require some form of exclusivity for a virtual data room to work. If you own a finance or law based business, then you are in luck. These are the most common types of businesses that online data room software is implemented for. In general, you should pay attention to such functional columns:
- Security – Security must be exceptional as all your most important documents will be stored there and must be protected. You can verify the level of security by checking existing certificates and state approvals.
- Ease of Use – If your equipment is not that technologically advanced and works exclusively in your field, then you should choose the VDR that will be the easiest to use. In either case, you’ll get a team of teachers from the developer, but to avoid common pitfalls, you need to find the data room that’s easiest for you to use.
- Price range: This is another very important point that worries every entrepreneur. You need to determine the exact cost of a virtual data room even before you buy it. This will be very convenient because you will expect to charge the price you have already set.
Second step. Determine what business transaction you need to prepare for
Business transactions come in many shapes and forms. You need to determine the type of transactions you will make based on the resources you have and how it contributes to your goals.
The third step. Follow the chart given to you inside the virtual data room
Almost all VDRs provide a framework that allows you to put together your due diligence documentation in the most efficient way possible. Every developer makes some additions or changes to this framework, so feel free to customize it however you see fit.
The fourth step. shop and organize
Immediately after you have purchased a virtual data room and with the help of company employees or manuals, you have established access and organized your files. For starters, you need to digitize them if you have them stored on paper. After that, arrange your file structure as indicated in the box.
Fifth step. Establish an internal security policy
In this step, you should focus your attention on the internal security policy. You can set specific security roles or personal restrictions. The difference is that with roles you can assign them to another company. This ensures safety and saves time. If you personally impose restrictions on everyone, you can stretch the process out considerably. Note that you do not grant the other company access to documents that do not require this level of access.
Sixth step. Once the files have been initially digitized and organized, upload them
Once you have completed the theoretical organization of the files and their subsequent digitization, you can upload them according to the plan you imagined. Before you get to the last step, you need to make sure that everything is done perfectly and properly. While doing this, you can be sure that you have done all the above steps perfectly and have not made any mistakes.
Seventh step. Invite investors or employees from another company to implement what you have in mind
This last step is to introduce the services of your data room to the other company’s employees or potential investors. This will allow you to show the finished product to the right people, which in turn will benefit your business. To do this seamlessly, make sure that your data room services are error-free and can actually deliver the results they were designed to deliver.