Due diligence is the core of an investment process.Therefore, it is worthwhile to design a Virtual Data Room to automate the evaluation and make this process more productive.
How do investors use Virtual Data Room?
Due diligence can be viewed as a comprehensive review of all business documents and records to assess the health and profitability of the business. Due diligence is usually in the interest of investors who want to buy a company and allows them to decide to continue the purchase process, return to negotiations or abandon the purchase. It is the evaluation of key information provided to the investor. This applies to both legal documents, such as contracts with major suppliers, staff, and financial statements. Usually, the third main aspect analyzed is taxes. But there are other important blocks for analysis:
- commercial/operational activities;
- human resources;
- information technology;
- direct seller.
The investor is the main figure that determines which aspects of the company’s activities in the due diligence process should be emphasized.
If a financing round or a sale of the company is pending, the investors request – as part of the due diligence – a structured presentation of the essential documents and information in a so-called Data Room. Virtual Data Room is a solution for corporate management for organizations that are linked in the promotion of the efficiency of their activity. The software is a solution that is leading in its area, offering a new set of services by the portal platforms with a functional superiority and scale, as it meets the needs of the most popular companies. New and sophisticated functions allow you to quickly access the portal, which can be tuned up to the widest range of business needs.
What are the Data Room functions?
The implementation of a Data Room system is one of the priority directions of development of any company since it can provide an improvement in the quality of customer service, reduce labor costs for support, and free employees from routine work.
When it comes to the provision of confidential business data, the Data Rooms are not only convincing in terms of their security. In addition, they usually offer role-based access rights to the documents that are stored in the room and enable the files to be stored in encrypted form. In addition, all activities in the Data Room, such as downloads, uploads or read access, can be comprehensively checked and analyzed. Additional protection of the documents can be implemented by inserting watermarks.
According to the virtual-data-room.org, electronic data exchange in the virtual workspace is a reality that almost everyone faces today. In addition, the integration of the electronic document management system with other systems makes it possible to practically implement the principle of one-time input of information, which increases the value of the information system and helps to reduce the return on investment.
The main functions of the Data Room document management system are:
- Creation, registration, processing, transfer, and storage of documentation;
- Tracking changes in documents and control of the deadline for their execution;
- Creation of reference books;
- Movement of documents, transfer of rights to use them, review and correction;
- Formation of reports;
- Access control;
- Version control;
- Automation of the main areas of office work;
- Management of meetings, meetings, contracts.
When introducing the Data Room system, most companies primarily think about the economic benefits of automation. However, the assessment of the system in terms of cost reduction is only partially correct. The main task of such systems is to improve the quality of administrative decisions.