Virtual Data Room Blog

How To Select The Right Data Room Provider For Your M&A Deal

Jun 28, 2019, 3:08:19 PM / by Kamal Raj

Start by asking the virtual data room these 10 key questions:

Your company's about to start work on a large deal. You've decided it's time to use a virtual data room (VDR) to store information securely and share it with multiple parties. And you have no idea which is the right VDR for you.

Sounds familiar? Good. It means you're in the right place and our marketing team are finally doing their job.

On paper, the majority of data rooms look the same. In practice, it's not so simple.

So, to help you differentiate between data rooms - and decide on which one to use - below are the 10 questions you need to ask a VDR provider before committing to one.

1. What's your experience and how long have you been in business? 

VDRs have only really become popular within the past 5 years so there are a number of startups operating them. Such companies don't always provide the best security (the same can be said for cloud-sharing platforms you might be familiar with) and may not even be around when your deal is finished.

Look for data room providers who have a strong corporate backing, a track record working with reputable companies, and a thorough understanding of how deals such as yours work.

2. What happens if I need help uploading documents or giving people access? 

The best VDR providers give you both a great data room platform and a great service, and you'll need to decide how important service is to you.

Will your VDR provider help you set up the data room? Is this service included within your fee? Good service may mean you pay a bit more now but it will save you time and money in the long-run if you think how much time and effort you can save. 

3. What happens if I need this service on a Saturday at 8pm while everyone's watching Netflix?

 "We're customer-focused and go above and beyond to help our clients".

If a VDR provider makes that claim then test it. Check if, and how, they'll support you on the weekends or when everyone's out of office, and whether they'll charge you extra for this.

Your M&A transaction doesn't stop after working hour, and most deals involved parties from around the globe, make sure you can rely on your data room provider.

best virtual data room support

4. How does Support and Help work if users are based in several time zones?

Before starting EthosData we were investment bankers working on global deals. We know the stress of a late night call. The last thing you want those call to be about is problems with your data room.

Will the VDR provider help you 24/7? Are you given a dedicated dataroom coordinator to help you manage your VDR?

We're not talking about a customer service rep called Gary (no offence Gary) who happened to be the first to pick up the office phone. We're talking about someone who knows your deal and data room inside out.

5. How many parties can access the data room?

This will affect how much you pay. Adding more people to your VDR can incur additional costs. Always ask how much they charge for additional access or if it's included.

6. Can I set different levels of permissions and access depending on a person's role and responsibility?

Good VDR providers should allow you to do this, while also letting you control who can print documents or copy files from the data room onto a USB.

Being able to grant different access levels, even to users from the same company, is key during any M&A transaction. And you should be able to set them up quick and easily.

7. What features or options are included at no extra cost? 

The following might not be essential for you now, but it's useful if your VDR gives you the ability to:

  • personalise your data room, or customise invites to it, with your logo.
  • bulk upload and download files so you don't have to do each file one by one like it's 1999.
  • keep track of the volume of data or number of pages in the data room.
  • run audits so you can view who has done what in the data room and how engage each party is.
  • have multiple people access documents at the same time.
  • insert and NDA that appears before new users try to view a document.
  • communicate between various parties while in the data room (this can be through a messaging system that avoids the need for long emails or calls).
  • search for any new files that have been added to the data room project since you last logged in.

There's no such thing as a free lunch. But when it comes to VDRs there are free features to be found. Make sure you ask for them.

8. How secure is my VDR? 

One of the main reasons you'll be using a VDR is to keep your documents safe and secure. Subsequently, it would be a bit gutting of your provider proves unreliable and gets hacked in the future.

Make sure they have third-party security certificates (such us ISO 27001, SSAE 16 and ISAE 3402), protection in place in the event of a breach, and a second server that can automatically activate and be up to date in your VDR's main server gets down.

How the document protection works and what are the different access levels you can set up it's important, but we're talking now about infrastructure security. You don't need to go deep and be a geek but just make sure you ask the right questions.

 

EthosData virtual data room - main dataroom menu

 

9. Where are my data room's servers based? 

Your confidential information will be stored on a provider's servers so it's important to check where these are located and what data protection laws might apply.

Ideally a second server will be based in a separate location to the first so your deal won't be affected by any security issues.

10. How does your pricing work? 

Is it based on:

  1. The amount of storage used or the number of documents uploaded?
  2. The number of users who can access the data room?
  3. A fixed fee or a flexible pay as you go one?
  4. The level of service given or even hours the support team has worked in your data room?
  5. All of the above?

If the above sounds confusing then it's probably because a lot of VDR providers make it so.

Find the one that simplifies it for you and adapts to your needs, and the deal you're working on, at that given moment.

EthosData is one such provider, with our virtual data room solutions allowing you to focus on your deal, not your data.

 

We have answers to all of the above questions and more, so get in touch today for your free trial or customised quote.

 

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Topics: M&A, Corporate Finance, virtual data room, VDR, dataroom virtual, Dataroom Demo,