due diligence process

Data Room due diligence checklist

Mergers and acquisitions are a multi-stage process, which requires time-consuming operations for its implementation. One of the most important steps of the M&A is due diligence, during which multiple exchanges of confidential company data have to be performed. Thanks to virtual data rooms, organizations can now not worry about the integrity of their documents, they can organize everything clearly and quickly, as well as provide a comfortable environment for studying these documents. In this article, we’ll look at what types of documents are required during due diligence.

Document checklist for due diligence

Below we will highlight the main types of documents that should be present during the due diligence and some examples of them:

  • Documents on checking business records

This list of documents includes data that describes all of the company’s trade licenses and permits. For example, you should include in this category of documents: tax information, intellectual property data, shareholders’ certificates, all possible business licenses, and the company’s constitution.

  • Financial auditing data

Verification of financial data of companies is a key point in the transaction, so you should pay due to attention to these documents. You should provide external experts with all possible financial data, such as financial statements, agreements with bankers, strategic plans and forecasts, notes to accounts, etc. Note that all of these documents require digital accuracy and correlation to reality.

  • Data from Human Resources

During M&A, reviewing employee information is also a very important metric. Documents that should go into this category include employee resumes, company policies on health care, sick leave, vacation pay, and overtime policies. You should also put in information about employee training and benefit terms and conditions.

  • Legal data

Legal documents include information about the company’s transactions with other partners. This list of documents includes various contracts and agreements, as well as information about the company’s legal affairs.

  • Intellectual property documents

Involving a great deal of reflection and analysis by the due diligence side, the intellectual property unit comprises the management of records of patents, trademarks, industrial designs, and other immaterial assets.

Why is VDR appropriate for due diligence?

Virtual data rooms are spaces that were originally designed only for mergers and acquisitions, so there is no better option today than data room due diligence. VDR makes it easier to organize and manage documents through the following features:

  • Smart Search Capability – A data room provides the ability to search for relevant material using keywords in just a few seconds. VDRs can also offer optical character recognition and a document viewer to reduce your search time
  • Automation – Automation is what allows you to optimize much of your work. With it, you can quickly and easily upload any volume of documents to the space in just one click. VDRs supports many file types, or automatically format you so you don’t have to waste your time. Also, with automatic indexing, you can easily organize your documents
  • Effective communication – Your stakeholder may often have various questions during due diligence, but in order not to risk security, it’s best not to use external applications to address those questions. Data rooms provide you with an encrypted chat or question-and-answer section so you can forward documents as much as you want to reach an understanding with outside experts.

You can find a reliable provider for due diligence at vdraum.de.

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