Are you looking for a virtual data room checklist? When it comes to due diligence for virtual data rooms, businesses have a lot of factors to consider. Not only do they need to make sure the technical aspects of the Virtual Data Room (VDR) solution meet their needs, but they also need to ensure that the legal and compliance requirements are taken into account. In this blog post, we will walk you through ten steps that you should take into consideration when choosing a VDR solution, whether you’re going for a cloud solution or if you want to stay on-premise.
What’s a virtual data room?
A virtual data room, also known as a due diligence room or data site, is an online repository of information that is used to support the due diligence process during M&A transactions and document management for all data that relates to a particular M&A project. VDRs provide a secure and efficient way for buyers and sellers to exchange sensitive information during the deal-making process.
Why use a virtual data room?
There are many reasons why businesses use virtual data rooms. Some of the most common reasons include:
- To save time and money by reducing travel costs associated with due diligence meetings.
- To increase security and protect sensitive information from being leaked during the due diligence process.
- To streamline the due diligence process by providing a central repository for all due diligence documents.
What are the benefits of using a virtual data room?
There are many benefits of using a virtual data room, including:
- Secure: VDRs use state-of-the-art security features to protect sensitive information from being accessed by unauthorized individuals.
- Efficient: VDRs help to streamline the due diligence process by providing a central repository for all due diligence documents.
- Cost-effective: VDRs can save businesses time and money by reducing travel costs associated with due diligence meetings.
What should you look for in a virtual data room?
When choosing a virtual data room, there are a few key factors that you should take into consideration. In our checklist, we want to show you ten aspects of the buyer journey that you should look at before you make a decision. Before you even tackle step one, make sure you talk to all stakeholders and capture all technical, operational, and legal requirements that matter to your organization.
Virtual data room checklist
Kindly note that the sequence of the following pointers could be changed to better match your organization’s workflow, but make sure not to forget any of them in your checklist.
Step 1: What does your business need?
The first step is to understand your business needs. What type of data do you need to share? How often will you need to access the data? What level of security do you require? Once you have a good understanding of your needs, you can start looking at different VDR solutions. Gather the names of providers and try to compare them against each other.
Step 2: Feature comparison
Next, you will want to take a look at the features offered by each VDR solution. Some solutions may offer more features than others, so it is important to compare them side-by-side. Make sure to look at things like file sharing, security, and user management. Make sure all required features are available as well in the service tier that you are looking at.
Step 3: Pricing and conditions
Third, you will want to consider the pricing of each VDR solution. Some providers charge per user, while others charge a monthly or yearly fee. Be sure to compare the pricing of each solution to find the one that fits your budget. If you realize that the allocated budget is likely not going to suffice, it would be a good move to raise this early in the project with all the stakeholders.
Step 4: Compliance requirements
In the fourth step on your virtual data room checklist, you will need to take into account the legal and compliance requirements of your business. Make sure that the VDR solution you choose is compliant with all applicable laws and regulations. If you’re a technical person and not from the legal team, you might want to check that with your internal legal department, or you might need to check for an external legal consultant to assist you during the project.
Step 5: Customer support and managed services
Fifth, you should take a look at the customer support offered by each VDR provider. This is important in case you have any questions or need help using the solution. In case you have limited IT resources to support the technical aspects of the project, make sure you can get integration support from the solution provider as well and not just a box that nobody knows what to do with it.
Step 6: Checking the reviews
Sixth, you will want to read online reviews of each VDR solution. This can give you some insight into how others have found the solution to be. You can also check industry resources or check with your peers. After all, if you are doing due diligence for a virtual data room, you’re not the only one in the world who has to fulfill this sort of compliance.
Step 7: Proof of concept
As the seventh part of the virtual data room checklist, you should ask for a free trial of each VDR solution. This will allow you to try out the solution and see if it meets your needs. If you picked a few candidates that you think might solve your problems and you could check all the boxes in your compliance requirements list, work out a project time frame for each of them to do a proof of concept phase. Make sure you also involve other stakeholders and maybe even a test user group.
Step 8: Certifications and experiences of other clients
Eighth, you should check to see if each VDR solution has been certified by a third party. This can give you peace of mind knowing that the solution is up to standards. If you struggle with this step, just ask the company to provide you with such evidence and details. Let them know it’s a requirement for the process of raising the order, and they are likely to support you as well as they can with that.
Step 9: Checks on the provider
Ninth, you should find out how long each VDR provider has been in business. This can give you an idea of the stability of the company. This doesn’t mean that working with a startup is a bad idea, but you should look at such aspects, and before you enter a contract for a virtual data room service, you should feel at ease with your solution provider.
Step 10: Integrations and compatibility
Never a green field to start with. At the end of the virtual data room checklist, you will want to make sure that the VDR solution you choose is compatible with your existing systems. This includes things like your email system and document management system. Sticking to industry standards is always a good idea, and you are likely to avoid any issues that might pop up in the future.
Some closing thoughts
By following these ten steps, you can be sure that you are choosing the best VDR solution for your business. Do your due diligence and choose the solution that best meets your needs. Having a checklist like this is maybe not the perfect blueprint for running the project from start to end, but it should help you get started. One last tip on this matter: There are no free VDR solutions, and neither should there be a free tier, except for the trial phase, of course.
These are no recommendations, but if you don’t know where to start with looking for companies that offer virtual data rooms, you can check out solutions like Ansarada, Brainloop, CapLinked, ContractZen, Datasite, DealRoom, Dealspace, Digify, Docully, Drooms, Firmex, Fordata, iDeals, Imprima, Intralinks Netfiles, ShareVault, Vaults, or Virtual Vitrium. This list of virtual data room providers is sorted alphabetically.
YouTube: What’s A Virtual Data Room? (Olivia Weatherill, Clinked)
Photo credit: The feature image has been done by Kraken Images.