Data Room Due Diligence

Due diligence is essential for all those involved in working with large volumes sensitive files. Due diligence files are traditionally stored in cabinets which are only accessible to those who have physical access. This method doesn’t scale well when dealing with larger volumes of data or multiple transactions. A virtual data room (VDR) allows multiple interested parties to review and comment on sensitive documents without making copies that may expose sensitive information. VDRs are commonly utilized to conduct due diligence in M&A transactions, litigations, bankruptcies, fundraising and audits.

To ease the due diligence process to facilitate due diligence, it is essential that a VDR has a file structure that is easy to navigate and organizes files according to their type or stage of the project. The structure of the folders can be modified to fit the needs of different industries and projects. The program typically comes with the default file index which matches the due diligence checklist to assist users locate the files they need faster.

To ensure that no one will gain access to private information without permission, the VDR should have all security features. This includes 256 bit encryption, remote shredding (with dynamic watermarks) and restricted viewing mode, secure sheet view, detailed activity reports, and antivirus protection. It should also allow you to limit the possibility of downloading and print documents as well as limit the amount of time users spend on a display or document. Different providers offer different security features, so you should compare their capabilities prior to selecting a service.

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