Collect the documents needed for conducting a Due diligence deal in virtual data room

Nowadays, due diligence documents are analyzed virtually and according to a pre-structured process in a virtual data room software. This article will highlight the common points of this software organization.

Digital data room: how to conduct due diligence deal?

If a company or a property is to be sold, the potential buyer wants to thoroughly check whether the transaction is worthwhile for him before making the purchase. The analysis of the purchase object’s economic, legal, and financial circumstances is part of due diligence. The aim of the test is a real risk assessment and the greatest possible assurance that the object of purchase will keep what it promises. As part of the preparations for the transactions, due diligence checks must also be carried out to ensure the completeness and correctness of the sales prospectus and minimize or rule out later liability risks.

As part of the due diligence procedure, research and analysis of the following aspects are carried out:

  • internal documentation of the company (group of companies) and its constituent documents;
  • the main significant transactions for the company for legality and compliance with all necessary procedures for their execution;
  • identification of missing points and development of appropriate recommendations for their inclusion;
  • full analysis of the management structure;
  • development of recommendations for its improvement;
  • assessment of all existing and upcoming corporate risks.

So, in this process, there is a legal assessment of risks, an examination of constituent documents, and a comparison of possible benefits and real risks for the future business owner. To facilitate work and save time, having all the necessary documents in one place is very important. For this purpose, companies set up 

What are the basic software features?

The data room is gradually filled, depending on how close the prospect and buyer have become. Certain persons are then granted access rights for a certain time. In the first phase, only publicly accessible documents such as register extracts, land register extracts, or organizational charts are provided in the so-called data room. Furthermore, the seller fills the data room with the employment contracts of the key managers, agreements of the most important customers, and the annual statements of the auditors.

The features that the software has to offer include a flexible data structure, documentation of all activities, a Q&A configurator that can be used directly in the document and enables all questions to be answered quickly, automatic updates whenever there is a change in the data room, and a system-independent use by being located in the cloud. In addition, to be able to evaluate the status of the transaction at any time, the data room has real-time analysis and reporting options.

A new generation of data room solutions is no longer just a platform for comprehensive verification. They can also be used to manage the entire lifecycle of an asset as they can serve as a central repository for all documents associated with a transaction or due diligence, allowing for immediate proper verification when needed.