Data Room Index: How to Organize Your Data Room?

Organized data storage is not only an example of well-coordinated teamwork but also a shortcut to success. Why? Surely you complete tasks quicker and more efficiently if you are familiar with the location and arrangement of documents. 

Business people are learning that a data room index provides easy navigation and simplifies operations with documents.

How does a virtual data room index help?

A data room index is a list of documents or a data room’s table of contents. It lists all of the documents, agreements, and other files inside the VDR. A clear data room index helps to find necessary documents inside a virtual data room easily.  It works and looks like a book’s table of contents. Therefore, in a virtual workspace, users can see: 

  • folders and subfolders
  • the number of documents in each of them
  • download and upload buttons
  • features for operations with the index (editing, printing, etc.)

How important is an accurate virtual data room index for due diligence?

One of the best answers to this question is a statement from Head of Enterprise Sales at OCUS, Russell Bradley-Cook:

“In our experience, 20-30% of questions are from bidders who cannot find documents.”

It is important to note that this problem affects due diligence and mergers and acquisitions. So what are the benefits of a virtual data room index?

Expedited due diligence

Compared to paper-based documentation, the platform enables a user to organize data more efficiently and quickly. Thus, due diligence takes less time.

Automated indexing

The software automatically organizes folders, subfolders, and files. In other words, it all but eliminates tedious manual labor, saves time, and minimizes effort. However, the store owner can change the parameters to rearrange the index as needed.

More efficient data searching

VDR indexing makes locating information within the virtual workspaces more convenient for all parties. That is because everyone can see the storage structure — which is easy to navigate.

What is a virtual data room folder structure? 

A folder structure is a method of organizing content so that the interface is understandable and user-friendly. Folders should have names that serve as a guide for finding information. Therefore, in the virtual workspace, users can see: 

  • the index
  • folders and subfolders
  • titles 
  • options for uploading, downloading, editing, etc.

An important tip – Advanced providers offer customers an additional feature — notes. More specifically, users can leave comments under each file for others. Consider three types of notes:

  • Private. Any user can create a private note that is visible only to the author.
  • Administrative. Admins add notes that are viewable by all users.
  • Group. Any group member can post this type of note, and all members of the group can view it.

How to organize a virtual data room?

Folder organization determines how easily teams, partners, and investors will locate them. For this reason, the data room owner should consider a few aspects:

  1. The folder name should contain the fewest number of words (be easy to read).
  2. The folder name should imply its contents (be informative).
  3. An administrator controls each user’s access to a particular folder.

The basic principles for organizing the folder contents and subfolders are as follows:

FoldersSubfolders
– Create folder categories that define the stage of the deal.
– Separate information by creating primary folders that indicate the data inside.
– Minimize the number of folders to keep things neat and avoid confusion.
– Be vigilant about the contents of subfolders to make sure that their files belong to a particular folder.
– Keep in mind that it is possible to store multiple subfolders with the same name in one folder.
– Note that this structure is a way of organizing a specific topic well, so avoid inconsistencies.

The virtual data room structure system provides for a large amount of company data. So, regardless of the number of folders and files, they are easy to work with and find quickly.

What is a data room checklist for due diligence?

Due diligence is the time-consuming process of verifying data by multiple parties. Moreover, this check must be thorough since the related plan of action depends on it — it can sometimes take more than a year.

Fortunately, virtual data rooms provide privacy protection, fast verification, and allow for thoroughness. Moreover, the virtual data room checklist is another advantage to the deal. This list of documents helps teams remember important details and prepare well before starting the process. 

In short, the data room checklist is a guide to the documents necessary to complete the inspection.

What is included in the data room due diligence checklist?

This section clarifies the various types of data required for due diligence. It is worth emphasizing that this is a list of standard documents, so that legal advice may be helpful.

Business information

These materials should contain information about the registration of the enterprise, various permits, or issued licenses.

  • State or local licenses
  • Stock certificates
  • Articles of association
  • Tax data
  • Municipal permit
  • Key staff members employment contracts
  • A general survey of intellectual property

This list is a confirmation that the company is operating according to national and local statutes.

Financial

This set of documents is one of the most important, as it demonstrates the financial background of an organization.

  • Auditor correspondence
  • Audited reporting covering the last three years
  • Credit and financial agreements
  • Business continuity plan valid for the period of the procedure
  • Policy plans
  • Account notes

Financial data requires arithmetic verification and research into the origin of the figures.

Human resources

  • Health and safety legislation
  • Organization rules for overtime, sick leave, and paid holidays
  • Information about training programs
  • Conditions under which the company provides benefits at its own expense
  • Evaluation policy

The purpose of this survey is to identify policies and the potential need for change.

Legal data covers transactions with other companies or individuals.

  • Supplier agreements
  • Loan agreements
  • Active litigation
  • Lease agreements
  • Settlement agreements

Conclusion

The organized virtual data room folder structure is one of the factors that accelerate transactions. And luckily, teams do not have to put forth much effort to benefit.

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