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The Ultimate Guide to Online Due Diligence

Every large enterprise needs a reliable way to protect its sensitive documents and confidential information, and this is especially true during due diligence. The due diligence process is a vital part of conducting significant business deals and financial transactions, such as a merger or acquisition (M&A). In addition to M&A transactions, due diligence is also important for things like initial public offerings (IPO), major investments, and even fundraising campaigns. It’s all about mitigating risk and making sure that each of the interested parties is doing their best to ensure a fair arrangement.

It’s one thing for two business leaders to agree to an M&A deal at face value, but it’s another thing entirely for both teams to ensure the deal is in everyone’s best interests. Confidential documents, such as financial statements, legal documents, and more have to be shared between parties to investigate the deal (i.e. due diligence). In past years, such corporate documents would have been filed away in folders within physical data rooms. These days, however, with deals often being done remotely, online data rooms are becoming more common. You need an enterprise solution, like a secure virtual data room (VDR), to ensure the integrity and confidentiality of your sensitive data. Here’s everything you should look for in a due diligence data room.

Enterprise-Level Security


When you have buyer’s stakeholders, attorneys, investment bankers, and other third parties reviewing your financial documents and sensitive information in your online M&A deal room, you can’t afford a data breach. This is why you also can’t afford to rely on traditional file-sharing options like Dropbox and Google Drive. These options lack the enterprise security of a reliable data room, not to mention that traditional file-sharing opens you up to any security vulnerabilities that may exist on third-party devices.

The best virtual data room providers provide services like watermarking your documents and protecting them with encryption, thanks to built-in digital rights management (DRM). You’re likely familiar with DRM as a way for creators to protect their intellectual property, and it’s also becoming the standard for true document security. With the right data room provider, it’s as easy as uploading your documents to the platform and clicking “enable DRM” to make sure that all required documents are safe.

Customizable Levels of Access

Not only can you protect your documents better in a secure deal room, but you can also set which team members in your data room can view which documents and control their level of access. Maybe you need to give potential buyers the ability to make comments or edits on a document, but you think that other team members should have read-only access to prevent documents from falling into the wrong hands. It’s easy to add new users and set their permissions as well.

Naturally, financial advisors will need to look over financial reports, and attorneys will need to look over any necessary documents pertaining to legal aspects of the deal, so you can set their permissions according to what they need. You can even allow dealmakers to download files if necessary, but you won’t have to worry about other parties keeping them. A reliable virtual data room service will let you rescind permissions at any time, and even if a user has downloaded one of your documents, they’ll no longer be able to access it. You can also set up your own security features, such as multi-factor authentication.

Document Tracking


Do you have an M&A or other major deal that needs to be done quickly? With the best due diligence software, you’ll be able to track when documents have been accessed, downloaded, and when edits have been made. This way, you can get a general idea of each team member’s pace, and you can direct them to the most important parts of their documents if they seem to be struggling. Ultimately, the point of online due diligence is to get your deals done as securely and conveniently as possible, so make sure to choose a solution with these excellent features.