It is essential to conduct due diligence whether you are an investor looking to invest in a new company, or an entrepreneur looking for venture capital financing, or an acquiring company who is looking to acquire. This involves analyzing the company, examining proprietary information and performing all necessary investigations to verify that the company is properly presenting itself. Traditionally, this investigation was done in physical meetings or using binders of documents. Now, it is typically performed using an online platform called the virtual data room (VDR).
A VDR allows you to safely share vast amounts of confidential information with other people outside your company. It is a great tool for M&A, litigation, bankruptcy and fundraising.
To ensure that the data stored in a VDR is safe, look for features such as watermarking, 256-bit encryption, and multi-factor authentication. Also, look for a platform with built-in security for infrastructure and baked-in compliance management. A good VDR will also have easy-to-use document management and search capabilities that can support due diligence processes, including features such as bulk-structure imports, automatic indexing, and control of permissions.
To ensure that the data in a VDR is accurate, choose an option that is robust in visualization and data analytics tools. These tools can be useful to analyze and compare the performance of different companies, such as margins of profit. They can also help identify potential areas that require additional investigation.
