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The Problem with Due Diligence Data Rooms

Many have heard about virtual data rooms as an essential component to a due-diligence process and indeed they are in use across numerous industries. Typically, data rooms are implemented as part of a due diligence process that arises when a company is looking to either be sold or raise money from outside investors. Data rooms are relatively simple to set up and allow management and other key employees to share important information with those outside the company. So, if traditional data rooms are easy to set up and effectively manage due diligence material, what’s wrong with these solutions? The simple answer is a lot. Today we’ll discuss two of the major issues associated with traditional data rooms.

Price, Price, Price:

The first and most obvious issue with traditional data rooms is that they are extremely expensive. Spending tens of thousands of dollars to manage documents in a six-month sale process might sound like a lot, but imagine if you had an entire portfolio of companies to sell. Expenses can quickly soar out of control. Now, if you could snap your fingers and have a data room up and running maybe you could justify the price. Unfortunately, set-up time brings us to the second problem with current data rooms.

Set-up Time:

Setting up a data room requires a significant amount of time to structure and organize the folders, upload documents, and review the material. Often data rooms are set up on tight timelines which inevitably leads to errors and incorrect document versions getting uploaded. And of course, once a buyer or investor view a document, whether it’s out of date or not, it’s very hard for them to “un-see” it. Best to get it right the first time. So, is there a way to protect yourself from these two major problems? The answer is yes.

A More Comprehensive Data Room Solution:

DocDep’s products Sonar and Radar effectively provide companies and investment firms the ability to structure and organize their documents to achieve a corporate governance premium. The best part is that because it’s cloud-based, both can easily be converted into a virtual data room at the appropriate time. Simply grant additional users access to the appropriate folders / documents and seamlessly manage your due-diligence process. These solutions significantly reduce set-up time, errors, and cost a fraction of traditional data rooms.
Sonar / Radar bring added value because they serve a dual purpose. First, they allow companies (and investment firms with portfolio companies) to achieve a corporate governance premium through a well-structured and easily accessible document management platform. This provides business owners and investors better access to documents and ensures they are always due-diligence ready. Second, both Radar and Sonar can be easily converted into a data room should a company be interested in engaging in a sale process or raising outside capital. Finally, these solutions are a fraction of the cost of traditional data rooms and provide all the same functionality. So stop paying obscene amounts for data rooms, allow DoceDep’s products to manage your documents and ensure you’re always due-diligence ready in a cost effective way.

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