A Beginner’s Guide to Setting up a Data Room for the First Time

by Josh Biggs in Tech on 30th April 2021

Data rooms allow you to share and store essential documents ensuring due diligence securely. Whether you have a fundraising obligation or you are exploring mergers and acquisitions and other types of critical deals, a data room can help accelerate and streamline the due diligence process. Data rooms also ensure that only the authorized people can access your documents. Fortunately, data rooms do not take long to open. Here is a beginner’s guide to setting up a data room for the first time.

  1. Select a Provider. Before you can begin your due diligence, you must choose a virtual data room provider. Due to the several providers in the market, consider checking the benefits and disadvantages of each. You can also check online reviews to see which provider is ideal for most people. Firmex Data Room is one of the best data room providers on the market. Once you choose your provider, you will need to set up your room and invite users. Most virtual data room providers will allow you to contact customer care immediately after you set up your room and invite users.
  1. Create Groups. The next to your setting up your new data room is to create groups and add new users. You will also need to set permissions, upload files, and create folders. As the administrator, you can also view all the members in each group. Non-administrators can only see the members of the group that they have access to. Adding new members is a simple process. All you have to do is to type in their email address. The user will then receive an email invite and add all their information. The administrator can also copy, rename, or delete groups.
  1. Set permissions. Once you create your folders, it is now easy to define user’s access privileges to the appropriate documents. For instance, you may grant auditors access to certain documents and deny angel investors access to the same files. When giving access to third parties, plan out the different roles you wish them to have in your virtual data room and the types of documents they can view. Some virtual data room providers also have extra security features such as watermarking and access logs. These additional features ensure that your documents do not fall into the wrong hands.
  1. Non-disclosure Agreements. While signing a non-disclosure agreement is not always necessary, it can be a precondition to gaining access to a virtual data room or viewing certain documents. NDAs are an additional layer of protecting your files. Some data rooms come with their stock of NDA text. However, consider drafting your non-disclosure agreement to meet your needs.
  1. Confirm Software Settings. After completing the above steps, ensure you run a final check of all your virtual data room settings. Check the security protocols and user permissions before launching the software. Once you are satisfied with everything, you can now send invitations to your user base.

Always plan when setting up a virtual data room for due diligence or any other transactions. Consider what your business will entail so that you can plan accordingly.

Categories: Tech