What Types of Documents Can Be Stored in a Data Room?

When a company is seeking to go through an IPO or close an M&A deal, it is required to exchange massive volumes of documents with potential buyers. These documents are considered confidential in nature and must be securely stored and accessible to bidders of the deal. A virtual dataroom allows buyers to look at these documents without having the burden of managing massive amounts of paperwork or traveling to a business. A well-designed VDR keeps competitors from accessing sensitive materials.

In general, the data room will usually contain financial due diligence documents that are audited. They include balance sheets as well as income statements and other reports. In addition there will be intellectual property due diligence files which provide information on the company’s tangible assets, like trademarks and branding. Due diligence can also include a section about tax due diligence, which is vital to recognize and understand the potential tax liabilities of the business.

Some companies upload pitch decks or whitepapers into their data rooms. These documents will provide a potential investor with a concise overview of the issue the company is solving, why they are uniquely positioned to solve the issue and what they are planning to tackle it. Founders can use their data rooms to share information regarding the current fundraising process. They can also include executed legal documents such as term sheets, capitalization and tables. A well-designed data room should include a suite of reporting tools, which provide administrators with a comprehensive overview of the user’s activity, including the documents that have been viewed and when they were viewed.