Data Room for M&A: Features, Selection, Structuring & More

What is an M&A data room?

An M&A Data Room is a virtual or physical space that contains all transaction-related documents and information. Historically, physical data rooms were established on the seller’s premises, and all key parties had access to them.

With the introduction of virtual data rooms for mergers and acquisitions, the process became more streamlined and effective. The dealmakers got an opportunity to retrieve the data at any time, from any location.

Why use virtual data rooms for M&A?

During M&A, a virtual data room is a vital instrument that helps businesses to go through deals much faster. It can:

  • protect sensitive documents throughout the deal;
  • allow sides to study the information conveniently;
  • help parties to collaborate efficiently;
  • improve the workflow.

One of the best things in a data room is that the manager can set different levels of access for users. It works as an additional safety measure since you can allow the third-party only to view the information if you don’t trust them enough. But also, it gives you more space to play during the deal since you can change user rights as things move forward.

Moreover, when new files are uploaded to the repository or existing ones are changed, everyone gets notifications. Thus, parties can review the changes swiftly, not creating any delays.

How to find the best data room for M&A?

Now the challenge is to select the right candidate among numerous M&A data room providers. And the very first thing to assess is security compliance.

Simplify the process of going through data room providers for M&A due diligence by answering the following questions.

Does the provider meet security standards?

Any data room M&A experience has to be straightforward and secure. Inspect the security protocol compliance by checking the necessary certification. Pay extra attention to the data centers’ location and organization.

Which software deployment is right for you?

A big advantage of an M&A virtual data room over a physical space is the convenience of access. All parties can contribute and retrieve data regardless of their location. Versatile software deployment plays a significant role in such accessibility. An M&A dataroom can offer:

  • Web access through Internet browsers;
  • Desktop applications for different operating systems, for example, Windows, macOS, Linux;
  • Mobile applications for iOS or Android.

Having a wide range of deployment solutions is always an asset. When all the participants have an equal chance of accessing the M&A Data Room from their own device, the transaction process gets a lot faster.

Does the provider offer checklists?

Experienced data room providers for M&A due diligence often provide legally compliant index templates, checklists, and consulting for Mergers and Acquisitions. For the sellers, these tools and services can significantly simplify the transactional preparation.

Additionally, some M&A data room providers will assist with breaking the process into stages. This way, all parties will understand where to find necessary info and who has access to each segment.

Can you save the transaction history before closing the M&A dataroom?

Once the transaction is complete, it is crucial to request a detailed record of everything inside the M&A data room. The transaction history might come in handy during legal disputes and any future transactions.

Established M&A virtual data room providers will offer transactional records on a flash drive to both the seller and the buyer. The record will feature all M&A dataroom documents along with the activity reports.

What kind of technical support does the M&A virtual data room provider offer?

Since virtual data rooms for mergers and acquisitions are tech-driven, technical issues are bound to happen. A fast and effective support team is a must in selecting the best M&A dataroom provider.

Evaluate the tech support by:

  • Availability. You want to go with a provider that offers support 24/7/365.
  • Communication channels. To ensure maximum accessibility, M&A data room providers should offer contact options via online chat, phone, email, or in person.
  • Response time. The sooner you get connected with an agent, the more time you will save resolving an issue or answering a question. Being able to get in touch with a representative in under 15 minutes is a good indicator.
  • Available languages. A multilingual M&A virtual data room support team will optimize communication by adapting to your comfortable language.
  • Expertise. A no-transfer guarantee indicates that every support specialist is highly knowledgeable and competent.

Think of the providers as potential members of your team and rate them accordingly.

Can you switch to a different plan while using the M&A dataroom?

Before you begin using an M&A virtual data room, examine their package solutions. Based on the volume of the transaction and services you will use in the process, go for the option that works best at the moment. 

But make sure you will have the option to upgrade or downgrade later on, in case your judgment didn’t match the actual requirement. Subscription-based service providers usually have no problem with changing your plan.

How significant is the provider’s data room M&A portfolio?

Take a look at the M&A dataroom provider’s client history. Focus on recognized names, as large companies tend to use the utmost scrutiny when selecting virtual data rooms for mergers and acquisitions.

Renowned M&A data room providers will also feature reviews from their current and past customers.

M&A dataroom selection & usage tips

1. Genuine M&A data room providers are usually very open about their security accreditation. Disregard the Data Rooms that provide misdirecting or confusing information.

2. Account for the levels of tech skills of all potential Data Room M&A users. Take advantage of the provider’s educational tools to make sure everyone is up to speed.

3. Use checklists and templates for a practical, hassle-free data room M&A experience.

4. Store the data room M&A records in a secure location. Avoid general-access storage solutions, such as cloud or audit rooms.

5. Check what other M&A data room users had to say about the quality of the support they received by reading independent reviews.

6. Review the conditions for changing your plan while using an M&A data room and ask questions if something isn’t clear.

7. Look for the companies that work in your field to ensure the M&A virtual data room provider will offer the most value for your case.

Main takeaway: Evaluate M&A data room providers by exploring their security compliance certificates, experience, features, support and terms of use

Essential M&A data room features

Once you’ve narrowed down to the most preferable M&A data room providers, explore the specific features they offer. The key functions lay within these five areas:

Document Security

Dynamic watermarking

Fence view

Virus scanners

Remote shred

Granular document permissions

Access Security

Time and IP limitations

Access control and expiration

Two-step authentication

Document Management

Bulk uploading and downloading

Versatile format support

Automatic indexing Intuitive file management

Full-text search

User Management

Individual and group user permissions

Bulk invitations

Multi-platform notifications


Multilingual adaptation


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How to structure virtual data rooms for mergers and acquisitions?

After selecting the most optimal data room software solution, concentrate on establishing an ideal data room structure. There are three main phases of creating and using the M&A virtual data room. 

Stage 1: M&A data room layout and organization

A thought-out structure is the foundation of any M&A virtual data room. Use the supporting tools and checklists to establish a logical flow of data. The ideal filing organization is based on two principles: category and confidentiality.

Begin by separating all the data into segments, such as HR, finances, legal, etc. Next, divide the documents within each sector according to their confidentiality level. You can achieve convenient organization in your M&A dataroom via folders and designated sections.

Add the documents into the pre-designed M&A dataroom and ensure you’ve achieved the most straightforward setup. It can also help to use the impersonation tool to view the data room for M&A structure from various perspectives.

Stage 2: M&A dataroom access management

Follow the confidentiality specifications to distribute access rights correctly. For example, the Human Resource section of the data room will only be open to people within the department and senior management.

Along with the access privileges, establish obligatory NDA signing and confidentiality reminders wherever necessary.

Once you feel confident about the layout of the virtual data rooms for mergers and acquisitions, invite the participants. Make sure to use bulk invitations whenever possible to save time.

Stage 3: M&A virtual data room maintenance and engagement

Establish a regular maintenance schedule to ensure all documents and access rights are relevant. An effective data room M&A experience is always linked to attention to detail and resourcefulness. 

Dedicating small portions of time to maintain the M&A virtual data room is a great time saver in the long run. What’s more, as you constantly engage with the software, you will be able to benefit from any new feature instantaneously. 

M&A virtual data room security compliance

All data room providers for M&A due diligence offer their own set of features and services. But the most reliable ones will have one thing in common — compliance with strict security protocols. 

M&A dataroom compliances and certifications include:

  • SEC
  • PCI DSS Level 1
  • ISO 9001
  • ISO 27001
  • FIPS 140-2
  • MTCS Level 3
  • SOC 1 /2
  • GDPR

Some investment banks will provide a list of approved M&A dataroom providers. To be featured on such a list, an M&A virtual data room will typically undergo a thorough security compliance check.

How much does an M&A dataroom cost?

A virtual data room is more cost-effective than a physical data facility. Using a virtual data room for mergers and acquisitions eliminates charges such as:

  • Rent and utilities
  • Travel and accommodation
  • Printed materials and stationery

However, you should still allocate a part of the budget to cover M&A dataroom fees. Most providers establish their own rate framework. For the most part, the final price depends on:

  • Storage volume. Data room providers for M&A due diligence will offer different storage solutions depending on the size of your company and the gravity of the transaction. While cloud storing will be the most widespread option, you might also have access to on-premise storage with some providers. 
  • Number of users. At first, aim to accommodate only the key users as administrators. Since the buyers are technically guests in your M&A virtual data room, aim for plans that allow unlimited guest visitors.

Keep in mind that many providers charge per user. Finding a subscription-based solution is always a more optimal choice.

  • Duration. Mergers and Acquisitions take time, so make sure you are getting a fair deal on your M&A dataroom. Go for quarterly and yearly plans, if possible, to save money.
  • Support options. Select a support arrangement that works best for your needs. For example, while some companies need dedicated advisory and personal presence of the provider’s representative, others manage with a live chat and an option to call.
  • Additional services. Consult the providers on what specific value they can offer your organization and how much extra options will cost.

You can learn more about data room pricing.

Make sure to take advantage of the free trial periods when starting to work with an M&A virtual data room. You can use this time to organize the data room and become familiar with all the features before diving into the intricate M&A procedures.