Mergers and acquisitions and funding rounds used to require the creation of a physical, paper-based deal room where decision-makers could perform due diligence and review sensitive corporate documents in a controlled environment. These deal rooms were usually hosted at the vendor company or law offices with staffers who assisted as needed as well as made sure that no one walked out with unauthorized copies of the documents.
While documentation was closely monitored, they really weren't that great. First, you had to get there. This meant travel -- oftentimes across country. You know the drill: if the deal room was located in New York and you worked out of Los Angeles, performing due diligence meant packing your suitcase, booking a flight, and kissing your family goodbye for a few days.
If you were the host of the deal room, you had your own set of issues. For example, you had to host all of these potential investors, buyers, or auditors, usually at great expense.
Today, it has become much simpler. Thankfully, the virtual deal room has provided a solid, and in most cases preferable, option to the traditional deal room.
For starters, a virtual deal room is hosted online. Thus, travel requirements and scheduling conflicts are immediately taken out of the equation. Once you grant access to decision makers, they can log in and review your documents at their leisure. There's no need to have a full-time paralegal hovering over investors, making sure that they're both cared for and supervised so that they don't walk off with your documents.
You can take security even further by requiring two-factor authentication, requiring the signing of a non-disclosure agreement prior to displaying any documents, and watermarking your documents. Finally, virtual rooms generate comprehensive audit logs, allowing you to gauge investor interest and see exactly who's viewed what.
If you're on the due diligence end, your life is much easier, too. Simply log in and access the documents that you need in an online virtual deal room -- all without the hassles of modern travel. Instead of kissing your family goodbye, you can access a virtual deal room from the comfort of home.
No matter which side of the deal you are on, a virtual deal room can prove to be much more efficient than the traditional one.