Online Due Diligence Process with Virtual Data Room

What is Due Diligence Data Room

The due diligence process is a comprehensive analysis of a company, department, or any other structure in order to evaluate assets and liabilities, performances and determine the strengths and weaknesses of the units. It is a procedure for drawing up an objective view of an object, including an assessment of investment risks, an independent assessment of the investment object, a comprehensive study of the company’s activities, a comprehensive check of its financial condition, and market position. The due diligence process is the vital phase of preparing a company for any business transactions.
In order to optimize the audit, the processing company uses specialized software that ensures high security and flexible online tools. The companies use the virtual data room for due diligence purposes that comply with digital security protocols and provides a flexible workspace, and the ability to simultaneously process documents by several participants in the audit process. VDR due diligence is a highly secure online space in which all the corporate documents and files are organized for a convenient due diligence process. Consider the tips of the online Due Diligence Process with Virtual Data Room software.

How to Use Virtual Data Room for Due Diligence

  1. Prepare a pre-made checklist for due diligence data room
  2. Install Virtual Data Room Software
  3. Structure of the Due diligence virtual data room
  4. Upload the documents and files
  5. Customize access rights and interacting in folders
  6. Send the secure invitation link to the users
  7. Check the structure and user permissions
  8. Assign the tasks, goals, and priorities
  9. Track and monitor the due diligence process

The experienced VDR providers help and accompany the process of organizing the data room for due diligence according to the specifics of the company and the objectives of the audit. VDR providers propose pre-prepared query templates that save the time of business transactions.
The target company should open up the online data room to the buyer as early in the process as possible. Virtual data room due diligence should have a logical structure and a full-text search function. New documents added to the data room should be marked and/or generate email notifications. The data room should permit bookmarking documents.

How to Choose VDR Provider for Online Due Diligence

There are plenty of due diligence data room providers that ensure a lot of basic file-exchange features. In order to increase the efficiency of the due diligence process, it is necessary to consider the availability of following due diligence data room services:

  • Security Compliances – Stay safe with ironclad security
  • File management
  • Activity Tracking – Control file access and manage users
  • Analytics – See the big picture with advanced analytics
  • Q&A/Requests Management

First of all, it is necessary to consider the availability of security protocols, and certifications that ensure high-level digital security of the online due diligence process such as ISO 9001/ISO 27001. Before the approving of VDR provider for due diligence, the companies check the features and certificates that guarantee effective online data transactions.

Due Diligence Data Room Checklist

There is no best structure for data room due diligence process. Depends on the type of due diligence targets, the potential buyers or auditors can request a lot of different documentation. That’s why the Due diligence VDR structure is based on the list of questions that potential buyer is interested. Nevertheless, the main first-line structure is quite similar for all the overall due diligence process. These are the types of queries that are designed-in templates.
How to Organize Virtual Data Room for Due Diligence?
There is no strictly defined list of counterparty verification measures in regulatory documents. It all depends on the specific circumstances. For the court and the tax inspectorate, a set of measures for one taxpayer may be sufficient, but not for another. The following structure is the most convenient and easy of use and searches for every user. This allows the buyer to get a general idea about the company and identify key issues that can be studied and considered more carefully.

Structure for Data Room Due Diligence

Main FolderSubfolder
Commercial Due DiligenceSuppliers
Marketing
Commercial Policies
Customers
Environmental, Health and Safety (EH&S) Due DiligenceEnvironmental
Health & Safety
Financial Due DiligenceAccounting
Finance
Operations
Insurance
Information Technology Due DiligenceIT Administration
IT Security
Intellectual Property Due DiligenceIP Registrations
IP Contracts
IP Litigation
IP Development
HR Due DiligenceHuman Resources Agreements
Benefits
General HR
HR Policies
Structure
Legal Due DiligenceCorporate Organization
Management
Capital Structure
Legal
Real Estate
Tax Due DiligenceTax Summary
Returns

In order to optimize the due diligence process, it is necessary to implement easy of use and logical structure of document folders. Folders and Subfolders structuring are vital for process effectiveness and also the right due diligence dataroom structure simplifies future settings for individual access to documents. Also, it is very important to use a specific document naming approach. The name of the document must be consistent with the content. Using the irrelevant naming confuses the users, due diligence participants, and complicates the workflow.