If you’re executing M&A capital raising, IPO, divestiture or any other due diligence process, virtual data rooms provide an encrypted platform for exchanging confidential information with other parties. It also simplifies intricate procedures and reduces legal risks.
However, integrating the concept of a virtual data space into your due diligence workflows requires careful planning and execution to ensure that it’s successful. You may make common mistakes when using the virtual data room in the event that you don’t.
First error: Confusion of File Names
To design a functional data room the first step is to arrange your files in a sensible file structure. The top-level folders need to be clearly marked and reflect the kind of business or transaction. Create subfolders within each folder to further divide documents according to their importance and their purpose. This will ensure that all parties can quickly locate the data they need to complete their work.
Another blunder to avoid is giving untrue or excessive access privileges to non-authorized individuals. This can result in the accidental disclosure of sensitive information or hinder collaboration. To avoid this it is crucial to regularly update and review user permissions in order to keep them in line with changes in project or person requirements.
2. Inadequate reporting
It is essential to have a thorough and complete reporting on the activities of your data room with a complete record of all files uploaded, which users can access the room, and what they are browsing. This will let you see how your data room is performing, and also identify any potential bottlenecks.
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