How to Choose an M&A Data Room for Your Needs?

What is the M&A data room?

The M&A virtual data room is a secure online repository where you can store all the confidential documents required for the M&A process. 

The M&A virtual data room is designed for the complex operation of mergers and acquisitions. The data rooms also streamline document management for information-heavy M&A deals, making the processes flow faster.

The data room makes it easy to organize important documents and share them with trusted people and clients. This allows businesses to make different processes, like extensive due diligence, faster and ease the burden of collecting and disclosing confidential information.

M&A data room providers


iDeals Virtual Data Room

4.81 out of 5.0

Merrill Datasite

4.6 out of 5.0

Intralinks Dealspace

3.5 out of 5.0

Ansarada Data Room

4.0 out of 5.0

Box Software

3.8 out of 5.0

Firmex Data Room

4.3 out of 5.0

How do virtual data rooms streamline the M&A process?

The biggest advantage of virtual data rooms is that they make tasks, like document sharing, reviewing, and signing online. Here are the specific benefits that virtual data rooms bring to the M&A process:

  • Improved document organization. M&A transactions require a lot of information to be exchanged between parties. Virtual data rooms help to organize documents using indexing, so it’s easy to find anything you need.
  • Increased data security. The data rooms are known for being extremely secure and compliant with many security regulations. There are also many security features like special authorization to view, download, or share sensitive data, depending on the document access that you have.

    In VDRs you can also track the document interaction history. And companies can require a user to virtually sign the NDA before viewing documents.
  • Improved integration. VDR providers allow the integration of other software making it easier to use the data room. You can use Microsoft Office documents, Salesforce, or chat tools, which will increase the data room functionality and will have a better user experience.
  • Acceleration of transaction processes. Using digital tools speeds up the processes. Traditional models require a lot of long meetings, parties traveling to review and sign the documents, etc. The data room saves a lot of time that could be spent on these things. Also, the VDRs enable international M&A deals, as the process doesn’t require meeting in person or traveling to another country.
  • Management of all processes in one place. All important documents are in one place so whenever you need to access them, you will quickly find them using the search feature.
  • The capacity to organize and securely share hundreds of sensitive documents. Virtual data rooms for mergers and acquisitions minimize the risk of data exposure.

Document security and organization are among the highest priorities for VDR providers. Moreover, with well-made security features and extensive reporting, you no longer need to create additional passwords for each document and keep track of them individually.

What to include in the online data room for M&A? 

Naturally, the set of downloaded documents will differ depending on your company’s profile and expectations from the future deal. 

Still, let’s define the common due diligence documents interested buyers would await in an advanced virtual data room for M&A.

Document categories
Document examples

General corporate documents

– Business licenses
– Business permits
– List of jurisdictions where the company is qualified to operate
– Cap table
– Partnership agreements
– Pro forma statements for the upcoming year
– Voting agreements
– Information about all the other assets (if any)


– Monthly info about financial transactions
– Letters from auditors
– Banking accounts
– Capital leases
– Pricing policies
– Information about previous cooperation with investment bankers (if any)
– Business transactions data

Marketing materials

– Full list of current customers and key info about them
– Sales projections and assumptions
– Competitive analysis
– Key review of the main competitors
– Brand books on the existing products
– Summary of product launches

Information about the team

– Full list of employees by position, salary, date of hire
– Onboarding documents
– Intern contracts (if any)Benefits’ plans

Intellectual property

– Patent trademarks
– Registered copyrights
– Domain name ownership

Information about the suppliers

– Full list of current and previous suppliers and manufacturers with their key info and pricing

Legal data

– Information about any litigation processes
– Legal disputes
– Confidential documents on insurance
– Data about collaboration with law firms

What shouldn’t be included in a virtual data room for M&A?

When running a data room software for mergers and acquisitions, you’ll inevitably need to share some sensitive documents with multiple users. 

But to prevent any security breaches during the due diligence process, just avoid adding unnecessary confidential documents. Focus on the potential deal and provide only the financial statements interested parties will require.

What’s more, conduct some research on potential buyers before the due diligence process starts. If they have also invested in your competitor’s business, you risk a display of highly confidential information.

Security compliance requirements to the data room for M&A 

When considering using a data room for M&A, check all of the needed requirements of the data room provider. Checking the security compliance is crucial as you are going to share sensitive information with the provider.

Here are the requirements for safety certificates (compliance and security assurances):

  • SOC 1/SSAE 16/ISAE 3402 (formerly SAS 70). SOC 1 certification shows that the management of the service organization doesn’t use or audit the user reports or documents, such as financial statements. This certification is important for preventing risks.
  • SOC 2 Type II (formerly SAS 70 Type II). This is another certification that proves that the organization is compliant with the SOC standards for secure handling of the financial documentation.
  • HIPAA/ITAR compliance. The Health Insurance Portability and Accountability Act (HIPAA) is essential if you work in the healthcare industry, as it shows that the organization is compliant with standards for electronic health care transactions. The United States International Traffic in Arms Regulations (ITAR) controls the export of defense-related data from the US. This certification is important for data security.
  • ISO 9001 / ISO 27001. ISO 9001 is the international standard that shows the quality management system. This standard is used to show the ability to consistently provide good services that meet customer and all regulatory requirements. ISO 27001:2013 proves that the VDR provider uses the best practices to verify security, availability, and data privacy.
  • GDPR. General Data Protection Regulation (GDPR) is a privacy and security law, which helps to maintain personal data privacy and integrity. Compliance with GDPR is very important for data exchange between companies in the EU and the US.

What to consider when choosing the best virtual data room for M&A?

You need to consider the following when choosing a good data room provider for M&A due diligence:

  • The provider’s experience. Check the provider’s website for the list of companies that are already using their platform and look for their reviews.
  • Industry expertise. Find out which industries the provider works with. There are certain certifications and features that can be required for some industries, like energy, legal, IT, or finance.
  • Pricing. Check the pricing plans that the provider offers. For small businesses, it’s better to consider the tariff plans per user and storage.  If you’re dealing with long-term M&A transactions with many participants and documents, then it’s worth choosing the fixed monthly fee.
  • Accessibility. The VDR should be easy to use as you would not want to spend a lot of time learning complex software.
  • Security. You need to check if the provider complies with security regulations and has good encryption methods.
  • Team features. Consider the functions that will help you to work better as a team. Some providers offer project management features, which allow you to optimize the operations in the company and track the needed processes.

The first stage of the pursuit of the perfect data room for M&A takes a form of market research: have a close look at diverse sources to get familiar with M&A virtual data room providers. It must not be hard as plenty of rankings and virtual data room reviews are available on the Web. Besides, consult with colleagues who have expertise in the VDR exploitation: it is always advisable to combine a few sources of feedback.

As soon as you know who the leaders in the market are and which rooms seem to be the most reputable, it is high time to parallel the instruments offered. The focal point of such virtual data room comparison is the unique traits. However, it would be unwise to neglect the standard tools – make sure that all the usual instruments are immanent to the repository. For a prospective user, it is crucial to decide which functions are important for the successful accomplishment of the project and which are pretty useless luxurious additions. As there is no need to pay for the extra data room services try to realize which tools exceed your needs.

Anyway, a theoretical contemplation about VDRs brings not enough profit – opt for a trial of the service to detect the best data rooms. Personal expertise together with the understanding of technical peculiarities of each depository helps the deal-maker to find the appealing room. Also, the price must be taken into consideration before the final decision is made.

Important functions that need to be included in a virtual data room for M&A

The standard features of the data room are usually notes, multi-factor authentication, advanced permissions, and the Q&A tool. When choosing the right M&A virtual data room solutions, you need to have certain functions that will be the most efficient and useful for performing the transactions. 

Here is the list of important functions the M&A virtual data room provider should have:

  • Search function. The feature enables users to search documents for certain keywords and phrases.
  • Q&A function. Allows having continuous communication and engagement between the M&A parties and the employees of each party.
  • Indexing. Allows to better organize a high volume of documents and quickly find the document when it’s needed for the transaction.
  • Document management features. People with certain access to the document have the ability to add notes, comments, set due dates, and assign users to tasks.
  • Permission settings. Allow to share documents but also restrict parts of these documents. View-only options and other viewing restrictions help to ensure the security of the documents.
  • Watermarking. It prevents illegal copying and distribution of the documents.
  • Audit logs. This feature allows you to track the activity of users and documents in the room. This also allows you to identify the levels of interaction and avoid redundant work.
  • Customer support. Fast responding customer support is extremely important. It’s also good to have 24/7 support if you’re working across different time zones.

How to prepare a virtual data room for M&A transactions?

In M&A deals, buyers need to have access to large volumes of documents as part of the due diligence process. These documents are confidential, so they should be stored in a highly secured place. And the virtual data rooms are a perfect option for this. 

They also make the review process much cheaper, as the buyer doesn’t have to handle documents or pay any experts to scrutinize the papers. Preparation of the virtual data room for a M&A transaction can be time-consuming but this is an extremely important task.

The process of preparing the M&A virtual data room should be started as soon as possible. If the complete data room is not ready on time, it can potentially kill the transaction.

Here are key steps and tips to structure the virtual data room for M&A transactions:

  1. Draw a schematic plan of the virtual data room before starting the M&A. It’s better if you envision how the virtual data room should look before the M&A process begins. The plan should be a rough draft, which will help you to operate faster and force you to think in advance about the needed documents for the process.

    You can draw this plan using small squares that represent the major files and under those squares write down the files that should be added straight away.
  2. Assign access to the relevant people. Make sure you give access to certain documents only to the relevant people. This will minimize data leak risks inside and outside of the company. This will also help hasten the operations, as more people are involved in the process.
  3. Create a systemized filing system. A well-organized filing system will help you save a lot of time looking for the right document when needed. It’s recommended to create the master file with the documents that will be required by almost all buyers. These include the standard NDA, financial sheet, and the non-confidential teaser.
  4. Add relevant and up-to-date documents. You need to update documents in the data room regularly. Outdated documents are not valuable for the M&A process.
  5. Try to continuously engage with the virtual data room. Regularly engaging with the data room helps you to structure the data room in such a way that it works well for the company’s process. By using the data room, your team doesn’t need to have data-heavy files, which can also prevent data breaches. 

When all the documents are in one place for due diligence, the chances of document duplication are low and the due diligence process gets faster.

How much does an M&A virtual data room cost?

Operating an M&A virtual data room is cheaper than using a physical data room. For VDR, you only need a computer with secure access to the Internet. Physical data room requires a secure space to keep the sensitive data. This can be more expensive as your storage cost will increase proportionally with the volume of documents.

Compare Virtual Data Room Pricing

The issue with physical data rooms appears when the buyers need to review the documents several times. This requires them to travel to the location, adding expenses for the company to accommodate this travel. Virtual data is cost-efficient as it’s stored in the cloud, which buyers can access anywhere.

Most M&A virtual data room providers rely on per-page pricing. VDR providers typically charge between $0.40 and $0.85 per page, depending on the complexity of your project. For small projects, this pricing is a great option, as you have a set number of documents. 

If you’re dealing with larger projects, then this pricing model is not very suitable for you, as it can lead to bigger fees. Annually you may spend between $20,000-40,000 for the virtual data room. However, the price may change depending on the number of users and the amount of storage needed.

Land-based space for M&A vs. virtual data room

Two kinds of repositories exist – a land-based due diligence room or a virtual data room for M&A. The first type seems to be slightly outdated as it is tied to a precise geographical location and implies a personal arrival of the people engaged in the investigation. Moreover, an analog data room for M&A is pretty expensive to open and keep and is rather hard to monitor from the perspective of the safety hazards.

Compared to a land-based space for M&A, VDR is characterized by a considerably lower price and higher convenience. Aside from military-level security, a web-based data room for M&A eliminates the key obstacles to smooth and fast deals, namely – time and space. When exploiting a VDR, M&A partakers see no reason to take business trips and to meet face-to-face: all the copies are stored online and can be accessed via any gadget having the Internet connection.

Another crucial aspect of a virtual data room for M&A is that it does not limit the room owners in terms of the visitors they could invite. Unlike physical repositories, bidders and investors do not have to wait for their turn: they can enter the room at the same time and work with the files as long as needed. And while they work all the actions are being recorded and later the record would be reflected in an audit report – a detailed log of the visitors’ activity. Hence, the administrators of the depository always know what is going on, how the bargain develops, and which visitors are among the most active and engaged.

For any M&A, VDR service proves to be a handy instrument that simplifies the entire process, helps to save time and money, and to establish a productive dialogue with bidders and investors.

Web-based data rooms in Canada do not differ from the rest of regions. iDeals, Firmex, SecureDocs, Ansarada, Box, and many trustworthy virtual data room providers operate in Canada and you may easily find the feedback depicting their strong sides and drawbacks. We would not focus on nuances of data room M&A providers – their detailed overviews are available on the site. We recommend getting familiar with the nuances and prices and following the general guidelines for a VDR selection.

Possible problems with an M&A data room 

Though virtual data rooms offer all the required tools for a successful M&A transaction, certain issues may arise when creating a virtual data room VDR. 

  • Incomplete or unsigned documents. This problem is common both in physical data rooms and virtual data rooms. If some of the documents required for potential financial transactions are not completed, the deal will be postponed. That’s why double-checking is recommended for seamless collaboration.
  • Data overload. Virtual data rooms for mergers and acquisitions usually offer their customers a generous space for document storage. But it doesn’t mean you should upload files without limits. Having too many irrelevant documents in your virtual data room M&A will inevitably slow down the whole process. 
  • Improper permissions. Traditional data rooms provide all the tools that allow the administrator to take full control of access rights. But unlike with physical data rooms, it’s easy to make a mistake. Carefully set up permissions so that all interested parties have access only to the documents they require. 

Tips on how to set up an M&A virtual data room

Modern M&A data room providers offer different services, so their setup might also differ. Still, certain recommendations apply to all virtual data rooms.

Think of several virtual data rooms for different needs

Having a few online data rooms is especially useful when you have a few potential buyers. This way, you provide targeted information for each bidder without other interested parties knowing about possible competitors. 

That’s one of the major advantages of online data room vendors over physical data rooms, as organizing several physical spaces would be more troublesome and costly.

Opt for read-only rights 

This is one of the security measures most virtual data rooms provide. File sharing is necessary for a successful M&A deal, but you can still do it in a controlled manner and without risk to your sensitive data.  

Setting up read-only rights, you secure yourself from any possible breaches.

Take care of a clear folder structure

The better you organize your cloud storage, the more fruitful the initial public offering will be. 

When it’s easy to navigate a VDR, the chances of closing the M&A deal are higher. Moreover, by demonstrating a meticulous approach to file sharing, you make your business stand out and attract potential buyers. 

This is harder to do with a physical data room.