Due Diligence Materials
Chapter 2: Setting up the data room

Lesson 1: Setting up your Virtual Data Room

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IN THIS LESSON

If you are advising the seller, you might be asked to help them set up their virtual data room (VDR).

If your client is the seller, they are likely to be required to share commercially sensitive and confidential information about their organization with third parties (potential buyers). This data is normally shared via a “Virtual Data Room” or “VDR”.

There are lots of VDR options available for sellers to use or some opt to use existing IT infrastructure so they don’t need to use a third party provider.

After your client has selected a VDR, you may need to help them set it up so that buyers can find the information they are looking for.

Here is a link to the documents the buyer will expect to see added to each folder. If your client is motivated to sell, then it is in their best interests to organize their data as best as possible and ensure the data is complete (in other words, you haven’t forgotten to include critical data which only slows down the whole process).

Most VDRs have a pretty standard folder structure where information is organized into these folders available. Depending on the sector and industry of your organization, some of the folders might be empty as they are not relevant. Below is an example folder structure.

  • Corporate records:

    • Articles of Incorporation

    • Bylaws

    • Corporate minutes (Board and shareholder meetings)

    • Stock ledgers and capitalization records

    • Organizational charts

    • Customer contracts

    • Supplier and vendor contracts

  • Financing and credit agreements such as:

    • Loan agreements

    • Credit facility agreements

    • Security agreements

    • Guarantees

  • Real estate and lease agreements:

    • Office and facility leases

    • Land purchase agreements

  • Employment and consulting agreements:

    • Employment agreements for key executives

    • Severance agreements

    • Non-compete and non-solicitation agreements

    • Consulting agreements

  • Intellectual property agreements:

    • Patent licenses

    • Trademark licenses

    • Software licenses

    • Technology transfer agreements

  • Dispute correspondence:

    • Settlement agreements

    • Demand letters

    • Cease and desist letters

    • Notice of claims or potential claims