Selling a business usually requires sharing sensitive documents and information with multiple buyers. If you’re trying to sell your business or simply need to share sensitive information in a safe manner, a virtual data room is the answer. A data room, also known as due diligence virtual dataroom can provide the secure distribution and control you require for your transaction.
Data requests from investors are handled throughout the deal flow process, but they tend to happen in two stages. Stage 1 data is required to create a Term Sheet (e.g. market fit for the product, financial models cap table).
Stage 2 detailed due diligence data request (e.g. security-related documents, material agreements, and more).
When you are creating a dataroom be aware that investors will want to navigate through data and documents efficiently and in a straightforward way. You should consider including a comprehensive document list and a logical arrangement to assist investors in finding the documents they require. One way to accomplish this is to use folders, metadata and an enduring document naming convention.
Another tip is to not share fragmented and unconventional analyses in the dataroom. This can be confusing for investors and could signal that they are not aware of the business. Also, ensure that you include only information that will benefit your business. You should also eliminate any docs that are no any longer relevant. This will help you save time and ensure that all parties have the most up-to-date and accurate information.
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