Selling a business usually requires sharing sensitive documents and data with several buyers. If you’re trying to sell your business, or simply need to share sensitive information in a secure way, a data room is the best solution. A data room, also referred to as due diligence virtual dataroom, provides the secure distribution and control you need to conduct your transaction.
Requests for information from investors are made during the deal flow process, but they tend to happen in two phases. Stage 1: data required to create a Term Sheet (e.g. product-market fit, financial models and cap table).
Stage 2 of the detailed due diligence request (e.g. security-related documents, agreements with material and more).
When creating a room for data, keep in mind that investors need to browse through the data and documents efficiently and in a simple way. To achieve this, consider having a comprehensive list of the required documents and a well-organized structure to make it easier for investors to find what they’re looking for. This can be achieved through the use of folders, metadata, and a consistent naming convention for documents.
Another tip is to not share unstructured and unorthodox analyses in the dataroom. This could be confusing for investors and signal an absence of understanding of your business. Also, make sure you include only the data that is needle-moving for your company and remove any docs that are no anymore relevant. This will save you time and ensure that all parties have access to the most current and accurate data.