An investor data room allows businesses to present a clear and comprehensive overview of their company, thus reducing due diligence and improving the overall valuation process. In contrast to hardcopy documents that can be difficult to share, upload and download, virtual document management tools facilitate streamlined sharing and secure sharing.

Investor data rooms also help to ensure compliance with the requirements of regulatory agencies and cybersecurity standards, ensuring responsible investment. Investors can access audit reports and penetration testing reports.

Companies should only include data that is relevant to their business when creating an investor data room. Inputting too much information could be inconvenient and distracting, leading investors to become confused or create a perception that you don’t have a clear understanding of the KPIs of your business.

An investor data room must have a clear structure for folders and logical categories to improve navigation and avoid confusion for users. It should also allow for document merging and annotations so that users can make notes or comments to documents within the VDR. The most reliable investor data rooms have activity dashboards, which offer a central view of the user’s actions, which include document views and downloads, forwards and prints. This is a useful tool to monitor due diligence progress and for ensuring compliance with any regulatory requirements in the process of valuing a business. Some VDRs also include an Excel viewer with built-in formulas which simplify data processing and analysis during the financial analysis stage of the business valuation process.