Every Virtual Data Room goes through stages. A leading Virtual Data Room provider would always provide a dedicated team to run each stage. Here, we take a look at the role a Virtual Data Room provider should take at each of the five stages.

Using a virtual data room has become a key part of the due diligence process, and for some M&A transactions it can even be used for longer than that. But when comparing vendors, it’s important to understand the value that each of them will bring to the table and, ultimately, how that will benefit the deal for both sides of your transaction.

There are two approaches you can take, a DIY style service where you only pay for file sharing capabilities and a full service model, where you receive dedicated expert support and assistance for the duration of the deal.

There are five key steps during the set-up and management of the virtual data room where the differences in these approaches will become clear, so when comparing vendors it’s important to understand what might be in store to see the benefits that a full service approach could bring.

1 – During digitization  

This is the stage where you will collate and digitise all paper-based documentation so that it can be accessed and utilised online. This is an incredibly time intensive process that can accomodate valuable resources if you choose to do it yourself, but if you use a managed service then this will be done for you.

There are still some areas that you should look for added value, including:

  • The quality of the documents that are uploaded could make a huge difference to the file size. The higher the quality, the more space they will take up and the more money you might have to pay
  • Discuss with your vendor the resolution of the documents (this should be 150 DPI for text documents and 300 DPI for images)
  • Also, think if you need these documents in colour. Again, this will have a cost attached, so consider whether black and white versions will be enough to get the information across clearly without having to dedicate unnecessary spend

2 – Before launch

With a managed service provider, you should expect a clear and thorough pre-launch process to be in place. This should start with a kick-off call, where the framework of the transaction will be understood so that the data room can be created to suit the unique requirements of the deal. This could include:

  • How much data is going to be uploaded
  • How the data is going to be structured
  • How many users there are going to be
  • Groups and permissions

It can also ensure the room is customised with features such as logos and the correct terms and conditions.

3 – At launch  

When launching the data room, deal co-ordinators will check that everything is in place that was agreed on the kick off call. This will include the index structure, document uploads and file sizes. It will also include a check of access levels, with dummy users included to check that each of the access levels gives access to the right documentation.

4 – When the deal is live  

Although most of the work is done before launch, there is still value from having a managed service throughout the duration of the deal. A good virtual data room with a managed service element will be able to proactively inform you when people have logged into the system and viewed the documents they are required to view, or more importantly, when they haven’t.

New users will inevitably need to be added to the system and potentially new documentation too. Having a deal coordinator at hand will ensure that this process is managed smoothly and consistently.

5 – At closure  

Once the deal is closed, the co-ordinator will remove access to everyone except the administrators and create a DVD archive of all of the data in the data room. Once this has been checked, verified and receipt acknowledged by the client, the data room will be deleted.

This is vital to ensure that data is removed securely, a full back-up is made and that the data room isn’t being paid for for longer than necessary.

By breaking down the life cycle of a virtual data room into its five constituent parts, it’s easier to see where the value lies in having a full service provider over a do it yourself model. By taking away a lot of the time intensive tasks and having an expert at hand to manage your account, both sides of the transaction can focus on the deal and ensure the best chance of success.