Data Room Software: Set up a Virtual Data Room

Choosing and setting up your digital data room depends on your needs and how you are planning to use it. The data room structure for an IT firm will be different from that in an M&A transaction. An IT firm may be using it as a data repository, but the data room will act as a deal room in mergers or acquisitions. Thus, data organization and structure will be different depending on the use case.

Regardless of your ambitions for using an electronic data room, there are some helpful tips that can make the setup process easier and more efficient. Without further ado, let’s dive right in.

How to set up your virtual data room?

Step 1. Choose data room software that suits your needs

Setting up a virtual data room comes second; selecting a data room that suits your business needs is the most important part. Consider these factors before choosing your data room software.

1. Security

One thing you simply cannot compromise is the security of your VDR. The core objective of a data room is to protect your business data, and that is only possible when you choose a VDr with very hard-to-break security. Here are some security features to look for:

• Multi-factor authentication to restrict unauthorized entries
• Data encryption to store and share data in encrypted form
• Digital watermarking to minimize copyright issues in the future
• Document access control; setting access restrictions
• Remote purging to remove data room files from stolen or lost devices
• Built-in NDA templates
• Audit logs for detailed reports on data room activities

2. Ease of use

An easy-to-use virtual dataroom software not only requires minimal training for your employees but also saves time. The data room users must be able to navigate through the VDR easily.

3. Customization

Although virtual data room providers develop comprehensive solutions, it is very much possible that you may need different features. Therefore, choose a customizable virtual data room that can be restructured according to your needs.

4. Customer support

It won’t be wrong to say that a virtual data room is as good as its customer support service. Facing technical difficulties at any stage is highly probable; lookout for easy-to-reach, 24/7 customer support service.

5. Pricing

Pricing is obviously an important element to consider. Data room vendors have different pricing models, including user-based, usage-based, per-page pricing, etc. Most importantly, comparing virtual data rooms on the basis of features, security, and pricing is mandatory.

Step 2. Decide which documents you want to upload

Deciding which documents to be uploaded in the virtual data room again solely depends on your business needs. For example, a data room for M&A due diligence, fundraising, or IPO must have all the necessary documents needed for these transactions. Similarly, if you plan to use VDR as a data repository, you should be able to add whatever documents you want.

Step 3. Decide how to organize documents

Generally, data organization in VDRs depends on the purpose they are created for. Companies that use virtual data rooms for due diligence or audits mostly organize data in a hierarchical structure.

If you intend to use VDR for due diligence, it is better to prepare a due diligence checklist. Moreover, here are some good practices for organizing documents in data room software:

• Assign a proper name and keyword to every folder and document so that other users can easily find their desired files.
• Create separate folders or directories to categorize your documents.
• Add search tags to make the file retrieval process easier.

Pro tip: it would be great to have the “file indexing” feature in your virtual data room. File indexing automatically allocates an index number to every file, which makes it easy to find.

Step 4. Set user roles and access permissions

Now, this step is probably the most important one — assigning user roles and setting document access levels. It is obvious that you don’t want every user in your data room to have the same level of access to documents. For example, your employees may need permission to edit or alter a document, but giving these options to external auditors may not be necessary.

You can decide who can access, edit, download, or print a document or even a part of a document. Moreover, the digital watermarking feature can be used to locate users who made changes to any specific document. Also, using NDAs can be useful to protect your data from being leaked or used without your consent.

Step 5. Confirm virtual data room software settings

Now that you are done with uploading documents and granting access permissions, it is time to make the final inspection. It is highly recommended to double or triple-check your data room settings, user permissions, data organization, security settings, etc., because even one mistake can prove to be very costly.

Top 10 best data room software in 2022

As a bonus, here is a list of some of the best data room software for all types of businesses:

1. iDeals
2. SecureDocs
3. Diligent
4. ForData
5. Intralinks
6. FirmRoom
7. DealRoom
8. Merrill
9. CapLinked
10. Securefile

Check the linked website for more info and reviews on the software.

Final takeaway

Setting up your virtual data room software basically depends on how you intend to use it. Uploading and organizing documents for due diligence, audits, or fundraising will be different, and using your VDR for just storing your business data will need different structuring. In any case, the above-mentioned can help you set up your VDR easily, and hopefully efficiently as well.