Virtual Data Room Best Practices and Provider Recommendations

Using a virtual data room without proper planning will not get the results you are looking for. One of the best ways to get the maximum out of online data room software is to set it up according to the service provider’s recommendation or following the best practices recommended by industry experts.

Although different virtual data room vendors usually have different user interfaces, features, and functionalities, the right VDR setup process can make things a lot easier for you. Let’s explore how.

Best practices in setting up your virtual data room

What follows next are some of the best virtual data room setup practices that will help you automate workflow and get the desired results.

1. Choose a virtual data room provider that understands your needs

The VDR market is full of mediocre to high-end virtual data room providers, but everyone has a different set of features, ease of use, security, and pricing systems. So how do you make sure you are choosing the right one? Here is how:

    • Make sure the service provider has cyber security standards, such as ISO 27081, ISO 27001, and ISO 27017 compliance.
    • Look for some basic yet very important features like two-step verification, digital watermarks, document access control, reporting (audit logs), expiry, copy protection, and NDAs.
    • Look for the essential document management tools like drag and drop, bulk upload and download, remote purge, auto-indexing, in-text search, and many others.

It is important to note that virtual data rooms are better than simple cloud-based due diligence platforms because VDRs are more secure and help automate workflows.

2. Prepare a roadmap of your data room software usage

You can set up and remove multiple data rooms at the same time or step by step, depending on your needs. That said, if you are setting up a data room for fundraising, you can create a separate data room for sharing preliminary information with a large number of potential investors.

Then, when you are able to shortlist the investors showing interest in investing, you can create a new data room to upload confidential documents for due diligence.

The important thing is that if you know how you are going to use an electronic data room, you can avoid unnecessary data uploading and organizing and save time.

3. Prepare a due diligence checklist

If you are setting up a virtual data room for the due diligence stage, you might want to follow a due diligence checklist. Sometimes, the investors or buyers share their own due diligence checklist, which will give you an idea of what type of documents you have to upload in your VDR.

However, you can also prepare your own due diligence checklist, and doing that can save a lot of time. That’s because as soon as the preliminary data sharing stage is over, you can directly move to due diligence without any delay.

4. Upload and organize documents according to the checklist

Document organization is very important during due diligence. That’s because the due diligence process involves mass-scale data sharing, and the investors should be able to locate any file easily. At the same time, uploading documents, file naming, categorizing, indexing, and ordering documents is vital. Most importantly, the index must be according to the due diligence checklist.

When opting for data room services, look out for the file indexing feature because it allows the investors or buyers to retrieve any document simply with the help of the file’s index number. Moreover, bulk upload and drag-n-drop features are super helpful when you have to upload hundreds of documents at once.

5. Set security settings and access levels

At this stage, you should set permission settings for different investors according to your needs. You can either create groups and set access levels for the whole group or define access levels for each investor separately.

If there is highly-sensitive material, it is highly recommended to restrict users from downloading or printing those documents. Another way to prevent misuse of your confidential data is to add dynamic watermarks to the documents. Dynamic watermarks can help trace original and edited file versions.

One of the best ways to protect your documents is to have the fence view mode in your data room. It’s an extraordinary feature that ensures nobody can edit, download, print, save, scan or take screenshots of specified documents.

Reconfirm your access settings and start inviting users. Some data rooms allow you to send bulk invitations — a useful feature indeed.

As a bonus, here are five best data rooms for due diligence:

    1. iDeals virtual data rooms
    2. DealRoom data room
    3. Firmex data room
    4. Merrill Datasite
    5. OneHub data rooms

Also, if you are interested in the prices for such services, you can see them here

Final words

Setting your virtual data room in the right order can save you, stakeholders, and all interested parties from trouble. It makes the data sharing and document retrieval process easier and faster, thus saving time for everyone. You can also get help from some of the best virtual data room practices mentioned above.

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