How to Construct a Data Room for M&A
Before virtual data rooms were available, M&A teams created physical spaces that had filing cabinets that contained confidential documents and other information. They were expensive and difficult to navigate. And, if you’re lucky that a sleep-deprived M&A analysts accidentally sets the entire decade’s worth of financial statements on fire!
Begin by identifying the documents that are essential to the due diligence process of your deal. You can then decide which are the most important documents to include and not include. Avoid putting in irrelevant information as it can distract from important issues that affect the future health of your business.
Then, you must decide how to organize your data into folders and subfolders for a hierarchy that’s easy to follow. Indexing is another option to mark files with keywords or metadata. This will help you find documents based on their content. All files should be given descriptive names that accurately reflect the content. If needed include dates and versions to track revisions to documents.
You can then upload all of your files to the data room so that anyone invited to the project can easily access. Many providers provide granular user access so that you can invite users to view or download certain types of files without affecting everyone else’s data access.
After you’ve uploaded all your files, the intelligent search feature allows you to quickly find them and then view them. It isn’t necessary to leave the data room. Some data rooms even come with an integrated document viewer that provides an easy and quick viewing experience.
