During the due diligence process of M&A transactions, businesses share sensitive data with advisors and buyers via secure virtual spaces called investor data rooms. These rooms are usually monitored and secured to ensure that sensitive information doesn’t fall into wrong hands. The most reliable virtual data rooms offer due diligence checklists that can be used to streamline the collection of documents helpful hints and ensure they are collected carefully.
Documents to include in your investor data room can differ depending on the circumstances and transaction, but the following documents are necessary for every data room:
Legal Information It includes articles of incorporation as well as intellectual property registrations and employee stock agreements. Also included is the cap table which breaks down ownership stakes and percentages in your company. Founders may also choose to include earlier investor updates, which shows investors that they are serious about transparency and communication with investors.
Financial Information This includes historical and projected financial statements and explains assumptions, sources and the reasoning behind these projections. Founders can include their business plan as well as a product roadmap here as well.
Founders can decide to separate the investor data room and limit access by assigning different user roles. For instance one section could have strategy documents and presentation decks for investors in the early stages, while the other section will contain more in-depth legal documents targeted at more serious investors. This lets them reduce time and effort by sharing only the documents they require, and gives them greater control over the confidential information shared.
