If a company plans to complete an M&A or IPO the company must exchange a lot of documents with prospective buyers. These documents must be kept confidential and safely stored and accessible to bidders for the deal. A virtual data room allows buyers to examine these documents without the need to manage the huge amount of paperwork or travel to the company’s offices. A well-designed VDR prevents competitors from accessing sensitive material.
In general the data room is comprised of documents for financial due diligence, such as balance sheets, income statement and other reports. There will also be files for intellectual property due diligence that will detail the intangible assets of the business like trademarks, branding, and so on. Due diligence may also include a section on tax due diligence, which is vital to understand and identify possible tax liabilities for the business.
Some companies upload whitepapers or pitch decks into their data rooms. These documents give a concise outline to potential investors of the issue the company is tackling. They also explain how the company is uniquely positioned to solve the problem, and what the company’s plan is to solve the issue. Founders can use their data rooms to provide details on the current fundraising process and include executed legal documents terms sheets, capitalization tables. A data room that is of high-quality has a range of tools for reporting https://vdrdeluxe.com/what-documents-does-a-data-room-contain/ that provide administrators with a quick glance at the user’s activity. This includes what documents were opened and when.