During due diligence of M&A Get the facts transactions, companies share sensitive information with advisors and buyers via secure virtual spaces known as investor data rooms. These rooms are usually secured and monitored continuously to ensure that the information contained within them does not fall into the wrong hands. Top virtual data room providers offer checklists of due diligence ready-to-use to help streamline the collection process and ensure that all pertinent documents are gathered carefully.
Documents you need to include in your data room can vary depending on your situation and the transaction. However there are some documents that are essential to every dataroom:
Legal Information This includes articles of incorporation and intellectual property registrations and employee stock agreements. The cap table is also included, which lists ownership percentages and stakes in your business. Founders may choose to include previous investor updates as well to convince investors that they have taken transparency and communication with investors seriously.
Financial Information: This includes historical financial statements as well as projected financial statements and the assumptions, sources and the reasoning behind these projections. Founders may include a roadmap for their product and business plan.
Founders can choose to break the investor data space into sections and limit access to the data room by granting different user roles. For instance one section could have strategy documents and presentation decks for investors in the early stages, while the other section could contain more thorough legal documents aimed at serious investors. This allows them to save valuable time by only sharing documents they require and also gives them more control over the documents shared.