You may know this image from movies, where all kinds of information was dug up from the deepest recesses in a secret dark room at night. Somewhat exaggerated, but until recently this was also the reality for due diligence in business acquisitions.
Until recently, because the virtual data room for book research is now impossible to imagine without. But how does such a data room work?
Why a virtual data room?
Digital archive
The days when you had to dig through whole piles of paper for information, or make a request to an archive, are gone. Most of all paperwork is now digitized and at your fingertips at the touch of a button. A virtual data room is the ideal place to compile all the information found during the book research process.
Transparent
The seller has a duty to provide potential buyers with all the information needed to make an acquisition. The virtual data room gives access to both seller and buyer, including all advisers. This gives everyone access to the same information. If there are questions about the information, they can easily be asked and answered online. This provides a transparent and traceable overview of all reports in the data room.
Saving time
A data room can accelerate the acquisition process, as no time is lost in retrieving and opening data. Moreover, both parties have a good overview of the total documentation, which can significantly shorten the search during due diligence.
Evidence
A data room that is as complete as possible is important evidence in the event of a claim. It sometimes happens that the buyer files a claim because the business acquisition turned out differently than expected. As a seller, you can only inform a buyer as well as possible so that he can make a decision. He himself is responsible for that decision and the virtual data room can prove that you as a seller have done everything possible to support that.
How does a virtual data room work?
You collect all relevant information for the business acquisition in the virtual data room. These are all financial, legal and other business documents, which are necessary for a transaction when transferring a business. A clear folder structure promotes findability. For example, you can think of the following folders:
- General data of the company;
- Financial information, including financial statements;
- The payroll and information about the organization;
- Retirement information;
- Fiscal overview;
- Legal documentation.
Costs virtual data room
You can go to several parties to set up a virtual data room. The cost of such an online environment depends on the amount of information stored in the data room. From a cost perspective, it therefore frequently happens in relatively smaller acquisitions that important information is shared outside the data room. But in a multi-million dollar acquisition, a virtual data room can be an advantage because of its transparency and to maintain the momentum of the acquisition.
