A virtual dataroom for purchases and mergers can simplify due diligence. It eliminates the need for document photocopying as well as the costs of indexing and travel associated with physical data rooms. It also makes documents easier to locate by providing keyword search capabilities. It can also allow bidders to perform due diligence from any location in the world.

A VDR allows companies to comply with regulations by modifying access for users and providing Best Practices of Private Equity Due Diligence an audit trail. A company could, for example, restrict access to certain folders. For instance, one that shows details of employee contracts. This information is only accessible to senior management and HR. This is important as it prevents accidental disclosures of private information, which could cause damage to a deal or even lead to a lawsuit, says Ross.

VDRs also help reduce the risk of data breaches which is among the most pressing concerns for M&A participants. IBM’s 2014 research found that human error was the main cause of 95% of data breaches. However a virtual data space can limit the risk of a data breach by encrypting all data and employing variety of security practices such as two-factor authentication, multiple firewalls and remote shred.

Before you begin the M&A It’s important to sketch your ideas of the VDR. This could be as easy as a rough sketch in paper or a detailed schematic that you can create using a graphics editing software.