How To Track Due Diligence Process With Virtual Data Room Due Diligence?

Automation of business operations with the help of the Data Room is not only one of the main trends of today but also a vital necessity for many companies. Let’s consider the features of this tool and what benefits it can bring to the business.

The peculiarities of due diligence procedure

Acquiring a new business is a multi-step process that must be properly managed. An important role for making a final decision on the prospects of the transaction is played by the results of the audit of the business that is going to be acquired.

Due diligence is a complex of analytical and operational measures to check the legality and commercial attractiveness of the planned transaction, investment project. As a result, a potential buyer gets a complete and objective idea of the proposed business. The main stages of due diligence are:

  • verification of all financial information of a given company;
  • conducting an inventory of all major assets in the company for their presence;
  • the reliability of the data presented in the investment memorandum is determined;
  • the tax policy of the company is checked, whether all taxes are paid on time;
  • hidden obligations are revealed, even if the seller forgot to mention them.

Virtual Data Room for tracking due diligence

The main task of auditors is to assess the financial performance of the counterparty, identify possible tax risks, as well as any benefits of the planned cooperation. They check everything: revenue and expenses, the internal structure of the enterprise, the level of financial control, credit burden, two types of debts, assets, and liabilities. Thus, a huge amount of confidential information is processed during the procedure, that needs to be stored in a secure data repository. For this purpose, most organizations use Virtual Data Room (VDR), a digital platform for the secure distribution of sensitive business data.

In this configuration, an important part of information resources, such as confidential archives, can be stored in the corporate segment, and the required computing power is increased by using the potential of a third-party provider. Such a scheme for using VDR technologies is quite effective, allowing the rational use of resources, saving financial resources. At the heart of the virtual data room due diligence is increasing transparency, communication, and engagement during business transactions. 

Due diligence Data Room benefits

Data Room ensures companies with the following benefits for organizing due diligence procedures:

  • Security

VDR ensures fast error correction, data recovery, backups, long uptime, and other cloud capabilities to keep your virtual servers running smoothly and protect your data. The reliability of the services is ensured by the fact that the software and hardware platform is located in specialized data processing centers, which include 100% redundancy of the network and hardware infrastructure.

  • Reduced costs

Data Room allows you to save on initial investments in technological capacities when the company does not yet understand how much capacity it will be enough for. And secondly, these services help to save on devices and software, as well as on the salaries of people who would serve their own IT infrastructure. 

  • Increase in productivity

Many manual processes are automated, which significantly increases the productivity of employees and the efficiency of the company as a whole. An important point in context is the ability to move away from the need to use several separate tools, such as Google Docs, task scheduling systems, chat, and other separate services. In many VDRs, all this is integrated into a single system. In addition, the interaction between departments becomes more holistic.