Selling businesses often involves sharing sensitive data and documents with many buyers. If you’re looking to sell your business, or simply require sharing sensitive information in a secure manner, a virtual room is the right choice. A data room (also known as a virtual dataroom to facilitate due diligence) can provide the control and distribution necessary to complete your transaction.
Investor data requests are made throughout the process of deal flow, but they tend to happen in two steps. Stage 1 data is required to prepare a Term Sheet (e.g. market fit for the product, financial models and cap table).
Stage 2 detailed due diligence information requests (e.g. security-related docs as well as material agreements and more).
When designing a data room take into consideration that investors are seeking quick and easy access to the documents and data. To achieve this, consider having a comprehensive list of required documents and a logical structure to make it easier for investors to find what they are looking for. A great way to check over here accomplish this is to use folders, metadata and an enduring document naming convention.
Another tip is to avoid sharing fragmented or unorthodox analyses in the data room. This can be confusing for investors and might signal that they are not aware of the business. Include only the relevant information to your company and eliminate documents that are no longer valid. This will cut down on time and ensure that all parties are provided with the most current and accurate information.