Due Diligence Software Role in a Deal Closing

The use of electronic document management during due diligence allows businesses to quickly exchange documents with partners, reduce costs, and redirect the attention of employees to other tasks. In this article, we will analyze the basic aspects of the due diligence software functionality.

The role of due diligence software

The effectiveness of business investments largely depends on the correctness of determining the purchase price of relevant assets and assessing the whole set of risks associated with the transaction. For this purpose, due diligence procedure is conducted.

The purpose of due diligence is to provide information to the customer about the existing business risks when purchasing an investment object, their avoidance or reduction. The need for due diligence arises in the following circumstances:

  • sale and purchase of the company (mergers and acquisitions);
  • assessment of the company’s investment attractiveness;
  • public offering of securities on the stock market;
  • creation of a joint venture;
  • commercial lending;
  • checking the reliability of your counterparty.

To simplify and automate this procedure, most companies use specially-designed digital software solutions like virtual data rooms. It is a cloud-based platform for storing and sharing business-critical data.

Virtual data room – a perfect due diligence tool

With data room due diligence software, you can:

  • model processes, and set the sequence of actions and rules for matching with static or calculated user roles;
  • save time on routine manual operations. Data room helps distribute the flow of incoming documents into sets, automatically register and fill out cards in the system;
  • analyze the performance of the performance indicators of the company and its departments, control the workload of employees and their performance discipline;
  • organize work with electronic documents from creation to sending to counterparties. Control the return of documents and ensure organized storage. Differentiate access rights, manage versions, track changes. Use the search by details and content;
  • ensure that contracts are negotiated on time. Use the built-in approval routes, so all interested parties are guaranteed to get acquainted with the documents. Ensure the legal significance of documents by signing with an electronic signature and easily control the return from the counterparty;
  • schedule meetings in the system – create agendas and minutes electronically. The decisions made are automatically sent from the protocol for execution to those responsible;
  • switch to a legally significant exchange of electronic documents with counterparties. You can send a contract or primary documents digitally without leaving the system;
  • store documents from different systems centrally and comprehensively manage paper and electronic archives with a guarantee of legal validity.

How to organize due diligence in the data room?

In the personal account, there is access to all the functions of the service for processing and controlling electronic document management. You will not miss new incoming documents, because the service will send a notification (you can duplicate it by mail). If you have any questions, you can look at the instructions on the top right or contact technical support directly from your personal account.

To send a document to a counterparty, you need to click on the “New document” button, select its type, specify the recipient, sign, and send. You can find a document by number, initials of the counterparty, and name.

Confidentiality of documents stored in the data room system is ensured by:

  • control and configuration of access rights to any system object;
  • encryption, which can be carried out both based on the user’s electronic signature certificate, and by setting a password;
  • logging all user actions: viewing, editing, exporting a copy of a document, etc.
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