After signing the confidentiality agreement, the investors receive the information memorandum and access to the virtual data room for the due diligence phase. So, how does the software work?
What is the role of the due diligence data room?
The global informatization of society, the widespread use of new information and communication technologies, and the gradual introduction of market mechanisms and modern management have increased the role of information in socio-economic processes and its recognition as an essential strategic resource. Since the central part of the information resource is business documentation, we can assume that at the present stage, the necessary prerequisites have matured for the transition to a conceptually new way of working with documents in organizations – document management based on information management methodology. A virtual data room is a perfect alternative for efficient data management.
A digital data room is a collection of documentation made available electronically to a potential buyer for due diligence purposes. Especially when buying and selling a real estate portfolio, buyers and often also sellers have to get a detailed overview of all the property parameters. Therefore, the data room will be set up for you accordingly, and all relevant documents will be made available in a suitable form in consultation with you. In addition, any queries from the buyer are researched competently and answered directly to ensure a positive result of the due diligence.
As part of the due diligence, the approached investors examine the insolvent company’s economic, legal, and financial circumstances after signing a confidentiality agreement. For this purpose, the managing director immediately provides the consultant with a list of information (request list) or an anonymous list of personnel. The data is processed and made available to investors in the form of a company presentation (information memorandum) via the data room. The preparation aims to work out an investment story together. In addition, it shows potential investors a corporate plan showing how the business model can be set up for the future after implementing the defined and planned restructuring measures.
Basic functions of the data room software
Data room helps businesses of all sizes worldwide take control of their due diligence document management, with a focus on fast content discovery and business process automation. Thus, your team can use our service to create, co-author, and approve any number of documents. Document management is only part of a global system, of which simple file storage or email can be a part. Such systems tend to embody the ideal – a knowledge management system, usually at the corporate level in their development.
The main functions of the due diligence data room are:
- acceptance, registration, and accounting of documents;
- ordering and classification of documents;
- document processing;
- version control of documents when they are modified;
- providing the possibility of remote access to documents;
- database information management;
- ensuring data security, allowing access to documents only to certain users;
- sending and distribution of documents;
- adding comments to documents;
- search for documents by section titles, and keywords;
- creation of personal document libraries;
- changing the configuration of documents;
- administration of accounting and data archiving.
Using a data room system can streamline procedures and save your team time. Employees can immediately know what they need, easily share files and determine how up-to-date a document is because the system works as a convenient centralized repository. This decluttering allows them to focus on more important duties.