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virtual data room, or due diligence room, can help you gain investors if you need a boost in capital or sell your business if its time to get out. Creating a virtual data room allows you to store all of your financial and other pertinent records in one, convenient place. This allows potential investors and buyers to look over your documents in order to make sound decisions with regards to their involvement in your company. Here are five things that you need to know when using a VDR:
1. Convert Your Documents
To build a virtual data room, you will need to convert all of your paper documents into electronic files. The easiest way to do this is to scan your existing documents and save them to your hard drive. If your existing documents are unreadable, you'll need to create new, digital copies and save them. Once you've converted your documents, you will place them on a file server provided by the company servicing your virtual needs.
2. Don't Do It Yourself
While storing documents online isn't a difficult task, creating a virtual data room should be done by professionals, particularly if you are trying to sell your business. At a minimum, you should consult an investment banker and an attorney before building your digital room. Having an attorney on your side will ensure that all of your documents are legally binding, and having an investment banker working for you can drive the final offer that you receive higher.
3. What to Include
When creating a VDR that you will be utilizing to gain investors or sell your company, there are certain documents that must be included. Make sure that you upload general company data, financial information, any corporate agreements, various legal documents, information regarding your insurance coverage and any litigation history. Additionally, you should include your HR manual, tax filings, marketing information, customer information, sales operation information and intellectual property rights and product information. Your attorney and investment banker may advise that you upload more files as deemed appropriate.
4. Benefits of a VDR
When compared to traditional methods of seeking investors or buyers, virtual data rooms have much to offer. Benefits of VDRs include reduced effort, increased document security, lower cost, greater ease of access, faster speed, lower risk to investors, the ability to trace the viewing of files and the ability to restrict document access. A VDR also allows last minute bidders and the ability to record bidder activity.
5. What to Look for in a Service Provider
When you begin to look for a service provider, you will quickly find that you have dozens to choose from. Look for a provider that fits within your budget, one that offers convenient technical service and one that offers the amount of space that you need. Look online for user reviews of the service providers that you are considering and utilize free trials when they're available.
If you want to inject more money into your business or have decided to sell your company, you'll need to provide a myriad of information to interested parties. A virtual data room allows you to store all of this information in a convenient location, giving access to those parties whom you have
approved to peruse your documents. Offering many benefits, virtual data rooms are the new way of conducting business in today's modern world.
About the Author
Mike Jones, a tech blog writer and business owner, suggests finding out how virtual data room information can help your business.