These days, it’s an exception rather than the rule to find companies using paper document storage instead of a professional and more secure platforms like a virtual data room for their confidential information. In most countries, building a data room was once a complex process.Thanks to the hard work of players in the industry and the quality service offered by many providers, data rooms have become accessible to many more clients.
Whether you’re an expert deal maker with years of experience or you’re setting up your very first data room, you’ll want to avoid these 5 common mistakes.
Mistake #1: Forgetting to Plan
Planning is vital for every activity in business, and setting up a virtual data room is no different. By creating detailed plans of action you can avoid being caught unprepared for any situations arising from:
The index structure you need to fulfill the requirements of the deal
Methods of adding and removing user permissions
Controlling the quality of service provided to stakeholders
Finalization of the deal, closure of the data room and backing up of the information.
If you overlook these aspects you’ll find yourself having to scramble to meet the objectives of your data room.
Mistake #2: Choosing the Wrong Provider
Not all virtual data room providers are created equal, and if you want the service you need it’s critical to make sure you choose a vendor who is able to deliver. Before you appoint a provider, find out whether the company has the resources to offer a full service or if any aspects will be outsourced. If so, you’ll need to pay close attention to issues such as security, processing times and the integration across different platforms. Even if your provider manages everything in-house, it’s important to understand the security protocols in place and the document protection options that are available to you. Your choice of provider can affect the success of your deal and the integrity of your information significantly.
Mistake #3: Not Understanding the Costs
Virtual data room pricing depends on a number of variables, including the level of service you choose. Cheaper doesn’t always mean better, so make sure you understand exactly what your pricing covers. For example:
If your documentation consists mainly of many pages of text, then pricing per megabyte could be more practical than a price per page.
Data containing high-resolution images require more space to store so a price per page could be a better option in that case.
Other factors that affect pricing include the scanning and uploading of data, as well as the number of users that require access. If you do the prep work yourself you’re likely to pay less than you would if the service provider managed the process—as long as you do it right.
Mistake #4: Not Being Clear About Permissions
Providing access to your data is a sensitive issue, and one that can backfire badly if you get it wrong. User permissions determine what various parties in the deal are able to view, copy, print and download, so don’t leave this critical aspect in the hands of a junior staff member. The permission structure is ideally created during the planning stage and requires the knowledge and experience of a qualified deal co-ordinator to avoid errors. Make sure you understand who is getting what access and why, and ask questions to clarify any points you are unsure about.
Mistake #5: Not Asking for Help
Nobody expects you to be an expert in managing a virtual data room, especially not your first time around. There’s a reason why you choose a service provider carefully, and even if you’re determined to do your own prep work and manage the process yourself, don’t avoid asking for help when you need it. If you’re using a service provider that offers a full co-ordination service it can help you to prevent unpleasant surprises and leverage the technology available to make the best decisions for the deal.
Our recommendation? If possible, always use a deal co-ordinator who will be able to ensure you don’t make these mistakes. This will result in effective management and a good experience.