A checklist for a data room is an inventory of documents companies must provide in the course of due diligence M&A or fundraising. It contains financial records as well as legal files as well operational information to ensure a transparent and easy review. Data rooms facilitate M&A processes by allowing companies and banks to work securely in a synced environment with bank-grade protection.
Data room best practices include anticipating which documents will be requested by investors, and then converting the physical files into virtual versions. This procedure should be as thorough as is possible to avoid last-minute unexpected requests or delays in closing a deal.
For example, buyers want to know if your company has a strong customer base that can serve as references and testimonials. This information can be displayed in an exclusive section of the dataroom that is geared towards prospective investors.
In the same way, potential customers want to learn about your management team and employees. In a separate section that you include resumes of employees and their salaries as well as pension information, equity percentages and performance records. If your startup is focused on products, you may need to provide a thorough analysis of the competition for your company’s products and features.
It’s important to keep in mind that successful M&A deals aren’t completed in the event that the due diligence (DD) process isn’t correctly executed. In fact an McKinsey study revealed that ignoring issues can lower the final acquisition value by 70% and lead to failures in mergers. A well-organized dataroom and efficient project management can help increase your M&A efficiency and decrease the chance that due diligence requirements are not being met.