You are thinking about investing in a virtual data room for your upcoming M&A but you are not sure which one to get since the virtual data room market is booming right now? You have come to the right place. In this article, you will learn about Data Room Software and how to choose the best VDR provider in the market.
During the merger and acquisition process (M&A) multiple business entities consolidate via a series of financial transactions. A lot of planning, research, due diligence and implementation of several strategies is involved. There are times when there is relative tranquility and the deals seem like it may not happen in the near future and there are times when there is frantic activity and all the parties involved require certain pieces of information urgently.
Having a functional VDR ensures that all teams are equipped to deal with any eventualities. A structured VDR gives easier access to updated data and this allows for seamless information sharing. Apart from mergers and acquisitions, companies also invest in VDRs for IPOs, strategic partnerships, conducting audits, raising capital, and any type of sensitive document sharing that needs to be done remotely.
If you already have a VDR, you need to know that this is just the first step. The VDR needs to be easy to access and get data in just one click and this is why you need folder structures and data room index for maximum effectiveness.
What Is a Virtual Data Room Index?
As the name implies, a VDR index is a list or a reference that shows all the files and documents that are inside that particular room. Much like the index inside a textbook, the virtual data room index is used to locate where particular data is and this makes it a very important tool in the VDR.
There is no single way to organize a VDR, but keeping it simple and neat can go a long way in making everything run smoothly. During an M&A process especially, the faster parties can find the data, the faster the deals can close. A data room index will come in handy throughout the M&A aa it will enable users to find data quickly without having to ask too many questions. You can organize your index to include; contracts, corporate governance, finance, HR, among others.
What Is Virtual Data Room Folder Structure and Why Is It So Important in the VDR?
Within the data room index, you will find the folder structure. The folder structure is what determines how the files will be organized inside the VDR. The person responsible for creating the folders should have a good understanding of the company’s business model so that he can structure the folders in a way that will make sense to all the authorized users.
Once your documents are organized under the folder structure into tiers and folders, it makes it very easy and convenient to access specific information. Folders should be named in such a way that they naturally guide the users to acquire the information they need.
For example, under the market data index, you can create folders for market assessment documents and competitive supply information so that authorized users who need this information can have an easy time accessing it. Under the financial information index, you can create folders for the income statement, cash flow statement, balance sheet, and shareholders’ equity. Folder structures make it easy for you and your team to neatly file documents and keep everything flowing seamlessly.