Some Unspoken Data Room Rules

virtual data room

Efficiency and accuracy of data sharing are essential attributes when it comes to certain processes in the corporate world, in particular Mergers and Acquisitions (M&A) or IPOs. Since the birth of cloud computing technology, Virtual Data Rooms (VDRs) have become the industry standard when it comes to information storing and sharing. When compared to their physical counterparts, VDRs are set up faster, save more money and can allow for a more efficient transaction turnover. While VDRs may offer the technology to maximize efficiency and usability, it is up to you to set it up in a way that takes advantage of that technology for your particular purposes. When setting up your VDR, take into account the following list of best practices to maximize your efficiency in building, organizing and managing your efficiency. When done properly, it can save you and your business time, money, risk and effort.

The Set Up:

For initial set up, it’s best to design a simple set up wizard to guide your prospective VDR users in installing the software. Designing it in such a way that it is familiar to those who will be using it will allow for the greatest ease of use, and will accelerate the implementation process. Usually, a simple Windows Explorer-like interface will be the most suitable, as most people are familiar with the design of Windows. This basically means that the interface should be as similar as possible to how your normal operating system looks and feels. Simple functions such as drag-and-drop, keyboard shortcuts and right-click functions are best practice for VDR set up. These features make adding, removing and organizing documents in the VDR the simplest and most effective that they could be. Some of the VDR solutions on the market do not allow for direct access to external drives such as thumb drives or network drives, so choosing the correct VDR that does have these functions can be very time saving.


The most important thing to know when organizing your VDR is to just keep it clean. Once documents from old transactions become redundant, it is best to remove them to keep the file registry clean. Another best practice would be to use a staging environment whereby folder structures and files can be easily organized and renamed before they are uploaded to the data room and made available to interested buyers. One of the more invaluable organisational tools that you should make use of is the ability to interlink documents. For example, say you have a 1000-page document that links to other documents. You should be able to upload that document and the linked documents onto the data room without losing the link. Most of the top VDR solutions offer this function.

Whether for a physical or a virtual data room, document indexing is always best practice. This means that all documents are numbered and then indexed, so that they can be found easily if referenced. Furthermore, if documents are deleted, added or moved around, the index should automatically re-organize itself to reflect these changes. Such a feature saves valuable time as you or your participants will not have to manually index documents.

Access Control and Protection:

It’s important to assign the correct rights and protection levels to the corresponding users of your VDR. Doing this correctly will prevent any unwanted access issues and reinforces overall trust among participants throughout a deal. The different protection levels allow you to control who can view, download and print which documents, and will watermark any documents that are downloaded or printed. It is best practice to make sure you assign the correct protection levels to the right people, as if you do happen to make a mistake, valuable information could be put in the wrong hands and all trust between participants in the deal could be lost. Furthermore, should you fail in this task and then have to perform due diligence, you may have issues and fines may be incurred. Most VDR solutions offer the necessary tools to easily control access privileges, so it’s up to you to keep them up to date. The Virtual Data Room service provider will handle the data encryption and server protection; so you only need to control your data, not worry about its security.

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