What Is a Due Diligence Data Room and How Can It Help Alcohol Companies?

The Securities Act of 1933 made due diligence a standard practice in the United States. The objective was to give investors a transparent view of financial statements so they could make better, more informed decisions. The second major reason to pass the Security Act was to make laws that help investors avoid scams and fraud related to the representation of financial or other important material.

One major problem that businesses face is how to give maximum information to investors without compromising the security of their data. Paper documentation is not only outdated, but it’s also time-consuming and insecure. However, thanks to due diligence data rooms (aka virtual data rooms), the security of confidential financial information has improved to an impressive extent.

What is a due diligence data room?

A due diligence data room, commonly known as a virtual data room, is essentially a cloud-based digital document repository. It is a multi-purpose yet easy-to-use data management solution with additional communication and project management tools.

A due diligence data room is regularly employed to undertake different types of due diligence processes in mergers, acquisitions, IPOs, biotech licensing, fundraising, litigation, strategic partnerships, joint ventures and real estate transactions (among other processes).

Using digital data rooms, all parties involved in a transaction can upload, create, share, annotate and exchange documents. They can use the platform as their central meeting point and arrange regular online meetings or communicate in private. Some of the best data rooms for due diligence include:

- iDeals
- DealRoom
- Intralinks
- Merrill Datasite
- FirmRoom

Virtual data room: A business solution for all

While you might think that virtual data room software is only available for businesses looking to do their due diligence in mergers, acquisitions, fundraising or similar financial transactions, it is actually far more widespread than that.

Although financial institutions started using online data room software for mergers and acquisition due diligence, it has now become a leading data management solution in every business sector, such as healthcare, sports, education, oil and energy, information technology, telecommunication, the alcohol industry, etc.

The introduction of an electronic data room in the alcohol industry can revolutionize multiple processes such as deal management, data protection, fundraising and communication.

Let's see how important a virtual data room can be in the alcohol industry.

The role of data rooms in the alcohol industry

Data room software can help alcohol companies in three major ways — data management, deal management and cost-effectiveness. Here are some benefits of VDRs for alcohol companies:

Safe data storage

Data protection is the biggest reason why businesses and professionals turn to virtual data room technology. Despite technological advancements, hackers keep innovating and hundreds and thousands of companies suffer from data thefts. Even one of the biggest social media platforms, Twitter, lost details of 5.4 million Twitter accounts to cyber criminals.

Online data room software brings state-of-art cybersecurity practices that give companies unparalleled data protection. For example, the best virtual data room providers in the market provide 256-bit SSL data encryption, which is used by the military and the banking sector.

It not only protects sensitive information from hackers but gives alcohol companies more control over internal data sharing. Other notable features include document access control, remote device purging, immediate document and data room access revocation, digital watermarks and fence-view mode.

Streamlined due diligence and deal management

Just like other industries, alcohol companies can use data room software for fundraising, IPOs, licensing, mergers, acquisitions and deal management. The good thing about virtual data rooms is that they not only facilitate due diligence, but companies can use them for post-merger integration.

Whether it is fundraising or a merger & acquisition transaction, data room services offer the following:

• A centralized place to exchange due diligence documents. Bidders or buyers can immediately access any document they need. They can request any missing document and get it in real time.
   
• Safe communication gateway that allows sellers, buyers, deal makers, fundraisers, investors and stakeholders to communicate in a single place. VDRs streamline online meetings and allow tens of users to participate in those meetings. The Q&A module in VDRs is a tool for immediate or real-time Q&A sessions during due diligence.
   
• A secure storage platform providing maximum data protection for sellers or fundraisers. They can share sensitive data like product formulas, financial information, licenses, employee records, etc. with confidence. Data rooms make sure that not a single document or page is downloaded or saved by unauthorized users.

Cost-effectiveness

Lastly, and most importantly, a virtual data room is a cost-effective solution. The diversity of its pricing methods allows businesses to choose the best pricing model according to the nature of their needs. Virtual data rooms also lower the printing and paper expenses for business documentation. Some of the best data room providers in terms of cost-effectiveness include Digify, SecureDocs, iDeals, Box and ShareVault.

Being a multi-feature business solution, due diligence data room software easily fits the needs of every business sector. It is cost-effective and automates data management and corporate communication.

Bottom line

Data rooms represent the most innovative and convenient tool for due diligence. Not only do they offer centralized data storage solutions and simplify deal management, but they also help to significantly reduce costs as well. Some of the best due diligence data rooms include:

1. iDeals
2. DealRoom
3. Intralinks
4. Merrill Datasite
5. FirmRoom

However, it is recommended to conduct your own data room comparison to make a proper choice.