Due Diligence Checklist for Virtual Data Room Preparation

It used to be that the live presence of auditors during due diligence checks on your company’s confidential documents was a mandatory step to close a deal, but now, thanks to the Virtual Data Room, your interested party can stay in your office to conduct this time-consuming process. You, on the other hand, can rest assured that your documents are secure in the meantime. However, it’s also worth remembering to properly organize your documents and to know exactly what information to put in the VDR. This article was created to help you with a data checklist for due diligence.

Data Checklist for Due Diligence in the VDR

The data room is definitely a useful tool that will help simplify your work and increase the efficiency of your transaction, but only if you use it correctly. You should think through all the details and all the documents you want to upload to the VDR because having too much unnecessary or outdated information will only alienate your potential partners or investors. You should also think about how to organize these files in a system of folders and categories, so you, your colleagues, and outside users can navigate through the space much more easily.

Below, we’ve created a list of essential document categories that should be present in the data room during due diligence:

  • Legal Documents

During due diligence, your partners’ auditors will need to review legal documents that provide information about your company’s structure and founding documents.

  • Financial documents

Reports, information about revenues, expenses, losses, forecasts, and more are an important part of the documents that help outside experts assess your potential and success.

  • Historical documents

This includes records of important decisions you’ve made in the past, board meeting minutes, and other data that can support the numbers the auditors count from the financial section documents.

  • Concept Documents

These documents describe your plans for the future and the reason you ended up where you are. These are various marketing strategies, and sales strategies, general presentations, and video presentations of your services or products. This will give the stakeholder a sense of where you’re headed.

  • Human Resources Documents

Getting to know your employees is also an important part of due diligence. Therefore, you should provide information about your employees, both basic and more detailed, it includes personnel management plans.

  • Asset Documents

Your company should provide potential clients with information on intangible holdings, such as your assets, as well as intellectual property, patents and trademarks, and tangible holdings, such as property and equipment.

  • Capital Chart

This is valuable information for partners, from which they can learn about the owners of the company, how much of the company they control, and information about the previous fundraising process.

How VDRs protect confidential documents

Companies can trust virtual data rooms during due diligence processes because they have flexible yet robust security measures. VDRs protect data from internal leaks and illegal document distribution by:

  • Access control features – you only allow access to certain documents to certain people
  • Document interaction controls – protect sensitive documents by only allowing them to be viewed. You can prohibit copying, editing, uploading, and forwarding, as well as screenshot the document.
  • Remote destruction – you can block access to a document in one click, even if it’s been downloaded to a third-party device
  • Watermarks – mark your ownership on any document, even videos, and presentations. Protect against leaks and contain all information about any interactions with the document