A business valuation as well as a data room are essential to due diligence. This is arguably the most crucial step in the M&A procedure. A well-organized and organized virtual data room can be the key to determining whether a deal is closing or not. It gives investors confidence that they won’t discover any hidden surprises.
The content of your data room should contain the most important documents that are common to most fundraises, including pitch deck, basic financials (cash metrics, revenue projections and cap table) as well as past updates from investors, and an updated list of happenings and commitments. Your VC will also need to review your legal documents, such as your term sheet and agreements with other investors, any existing loan agreements and up-to-date company documents like a copy of your revised or amended articles of incorporation and resolutions for your board.
Another vital piece of documentation to share is your competitive analysis. It should show that you have a clear understanding of your market and your product is properly positioned. Referrals and customer references will assure buyers that your product is well-positioned.
Lastly, it’s important to keep your data room regularly to show that you’re committed to transparency and communicating with your backers. It could be in the form of a monthly or quarterly report, highlighting the primary highlights and highlighting any important metrics. Some companies even have a KPI dashboard, which shows that they are dedicated to maintaining a constant dialogue with their investors.