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Due diligence

In business transactions, the due diligence process varies for different types of companies. The relevant areas of concern may include the financial, legal, labor, tax, IT, environment and market/commercial situation of the company. Other areas include intellectual property, real and personal property, insurance and liability coverage, debt instrument review, employee benefits and labor matters, immigration, and international transactions.
Data rooms are used in many different types of transaction where the vendor (in the case of a property, M&A or share sale)  wishes to disclose a large amount of confidential data to proposed bidders typically during the due diligence process. The traditional data room will literally be a physically secure continually monitored room, normally in the vendor’s offices (or those of his lawyers), which the bidders and their advisers will visit in order to inspect and report on the various documents and other data made available. Often only one bidder at a time will be allowed to enter and if new documents, or new versions of documents are required these will have to be brought in by courier as hardcopy. Teams involved in large due diligence processes will typically have to be flown in from many regions or countries and remain available throughout the process. Such teams often comprise a number of experts in different fields and so the overall cost of keeping such groups on call near to the data room is often extremely high. Combating the significant cost of physical datarooms is the virtual data room, which provides for the secure, online dissemination of confidential information.