When people think of data rooms as due diligence, they imagine mergers and acquisitions that involve companies sharing information with other parties in a controlled manner. Due diligence data rooms are used by lawyers to plan cases or communicate with co-counsels or opposing counsel during litigation. Investment bankers can use them to securely share information during capital raising or IPO preparation with potential investors and underwriters.

It is essential that all documents and files are uploaded and prepared prior to inviting third parties to the portal. A preparation period can be useful to organize and upload documents in an organized manner without the pressure of deadlines. When the primary due diligence process begins the granular access permissions for each user can be set for each individual user starting point: comparing director portal tools and access to documents and folders may be suspended or revoked at anytime.

The structure of the folders in a due diligence data room must be well-organized with an easily understood and concise title for each file or document. A well organised folder structure can help users to locate the information they’re searching for. A search function can be useful for quick access to documents. Certain VDR providers, like FirmRoom offer templates for diligence folders that can be uploaded in order to create an automatic and a user-friendly directory.