How to Create a Data Room for Your Business
The process of selling a business often requires sharing sensitive data and documents with many buyers. Virtual data rooms are the perfect solution for anyone who wants to sell their business, or who requires a secure way to share sensitive information. A data room (also known as a virtual dataroom for due diligence) can provide the control and distribution necessary to complete your transaction.
Investor data requests come in throughout the entire deal flow process however, they typically occur in two stages the first stage is data needed to create a term sheet (e.g. financial models, fit to market, and cap table).
Stage 2 detailed due diligence data requests (e.g., security-related docs as well as material agreements and more).
When creating a room for data, remember that investors want to browse through data and documents efficiently and in a straightforward way. To accomplish this, think about including a comprehensive list of necessary documents and a sensible structure that makes it easier for investors to find the information they need. One method to accomplish this is to utilize metadata, folders and the use of a consistent naming convention for documents.
A second recommendation is to avoid sharing data in a fragmented and unorthodox way in the dataroom. This can be confusing for investors and could signal that they are not aware of the business. Also, ensure that you include only information that is relevant to your company and remove any documents that are no anymore relevant. This will help save time and ensure all parties are provided with the most accurate and current information.