Virtual Data Rooms For Mergers and Acquisitions

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A virtual data room for mergers and acquisitions is a great way to streamline due diligence. It eliminates the requirement for photocopying of documents as well as the costs of indexing and travel that are associated with physical data rooms. It can also make it easier to find information by offering keyword search capability. It also allows bidders to conduct due diligence from any place in the world.

A VDR lets companies satisfy regulatory requirements by customizing user access and providing an audit trail. For instance, a business can limit access to certain folders, such as one showing details of employees’ contracts, ensuring only the senior human resources and management are privy to the information. This is important because it helps prevent accidental disclosures of private information that could damage a deal or trigger a lawsuit, says Ross.

VDRs also help reduce the risk of data breaches. This is one of M&A participants’ top concerns. According to a study conducted in 2014 by IBM the human error is the main cause of data breaches in 85 percent of cases. A virtual data room could reduce the risk of a data security breach by encryption of data and implementing a variety security practices, including multiple firewalls and two-factor authentication.

Before you begin the M&A it is a good idea to sketch out your idea of a VDR. This can be as simple as a rough sketch on paper or more detailed than a schematic in a graphics editor software.