The virtual data room market has grown tremendously over the past few years. And the large part of virtual data room use cases are those related to investment banking. Be it equity fundraising, M&A, loan syndication, or restructuring virtual data rooms have been the primary virtual collaboration points.
However, choosing the right data room software for investment banking is as important as the technology itself. That’s because data rooms for investment banking need different features to facilitate unique workflows in the processes mentioned above.
Here is a detailed guide on choosing the right online data room provider for investment bankers. Additionally, you will discover the best data rooms for investment banking.
What is investment banking data room software?
A virtual or electronic data room is a cloud-based document repository used for storing, sharing, archiving, or distributing business data. The data room technology is mostly used by professionals, legal advisors, or dealmakers in fundraising, litigation or legal affairs, M&A, IPOs, etc.
An investment banking virtual data room is used by investment bankers and deal facilitators to share and manage data during IPOs, bankruptcy cases, loans, M&A, fundraising, etc.
Key factors to consider when choosing the data room for investment banking
“Online data rooms are the secure vaults of modern finance, seamlessly enabling investment bankers to navigate the complexities of due diligence, maintaining transparency and trust in every deal. Thus, choosing and employing the right service provider is paramount to make the best use of this tech,” — says Gilbert Waters, co-founder, and marketing specialist at {satellite name}.
Here is what to consider during the VDR selection process.
Security
Online data room software security is always at the top, no matter if you need a VDR for investment banking or any other purpose. It is the fundamental feature and the biggest selling point of data room technology.
Investment banking data rooms are mainly employed to share massive volumes of data with multiple external parties. Thus, it is important to have advanced security features for such VDRs. Here are some examples:
- Screen-only viewing. It keeps the documents in view-only mode. No one can edit, print, save, or save such files.
- Encryption. Data encryption tools help you store data in encrypted form. That means that even if someone gets hold of confidential files, they cannot open and view them without the decoding key.
- Fence-view mode. Fence view is a remarkable feature offered by quality data room providers. It limits unsolicited viewing of documents and prevents users from taking pictures or screenshots.
What’s more, make sure the data room services you hire have certifications such as FISMA, SSAE 16, ISAE 3402, and FedRAMP.
Deal specific features
A virtual data room for investment banking serves multiple purposes. Investment bankers use it for:
- M&A (buy side and sell side)
- Initial public offering (IPO)
- Loan syndication
- Bankruptcy
- Restructuring
- Strategic partnerships
- Debt management
- Private placements
- Capital raising
You need a virtual data room that helps you manage all these tasks and stay organized. It is better to have as many features as possible to automate these processes to minimize physical efforts.
For instance, the non-duplication feature in deal management immediately notifies you if a document is uploaded more than once. Similarly, the auto-indexing feature indexes every single document as soon as it is uploaded. You can retrieve the file later with the help of an index number.
The smart text or smart search feature allows you to find any file, even if you cannot recall its name. You can simply locate it with keywords or relevant text.
More control
There will be many users in an investment banking virtual data room, and many of them will be outsiders. Therefore, it is mandatory to look for the best data rooms in the market that can give you full control of the data flow in your VDR.
For example, the data room you choose must allow you to decide who can or cannot have access to the files and folders in the VDR. You must also be able to decide who gets to share, edit, copy, print, or download files from your data room.
Similarly, it is better to have a data room or document access revocation feature to make sure you can revoke access for any user at any given time. Other important features include document shredding, IP access restrictions, etc.
Training
As there are different types of people with different calibers participating in investment banking transactions, your teams need a virtual data room that is easy to set up and easy to use.
What’s more, look out for a data room vendor that provides free basic training and offers 24/7 customer support, since you might need it in the future.
Final words
Investment banking virtual data room software is a multi-purpose data management solution used for IPOs, M&A, debt management, fundraising, loan syndication, etc.
When choosing a data room provider, consider elements like data room security, deal-specific features, control over data flow, and reliable customer support.
Some of the best data room providers for investment banking include iDeals, Merrill, Caplinked, and Ansarada.
