The private equity market continues to grow at an exceptional pace, particularly following the COVID-19 pandemic. In the aftermath, investment management companies must find new ways to manage the volume of information related to potential investments. A virtual dataroom (“VDR”) can be used to streamline and speed up the due diligence process. A VDR can be used to help PE companies conduct a more thorough analysis and evaluation of market position as well as growth opportunities, cash flows, and track records of prospective investment targets.
Using a VDR to perform the initial phase of due diligence can assist investment managing teams make more profitable deals in a shorter period. It could be a significant influence on the bottom line. There are certain aspects to consider when selecting the right VDR as part of private equity due diligence.
First and foremost, the VDR must provide a scalable and secure online platform for conducting due diligence on potential investments. It must allow users the ability to upload, organize and share documents on any device with Internet access. In addition, a complete due diligence process should be included. This should include Q&A management tools with granular access control of folders and files, drag-and-drop capability for uploading files, and version control.
A comprehensive analytics tool is also needed to gain insight into the development of the transaction. This should include real-time reports on document downloading as well as user activity and Q&A conversations.