A business valuation that includes a data room is a crucial element of due diligence, which is the most crucial element of the M&A process. An organized and thorough virtual data room could make the difference between closing the deal or not, because it gives investors the confidence that there won’t be unintentional surprises.
The data room you have set up should contain the essential documents required for most fundraises, including the pitch deck, as well as the basic financials, including cash metrics, revenue projections and a cap table, recent investor updates, an updated list of commitments, and future events. Your VC will need to review all of your legal documents, including your term sheet and agreements with other investors, loan facilities in place, and the most recent company documents such as copies of amended or revised articles and board resolutions.
Another vital document to provide is your analysis of competition, which proves that you have a deep understanding of your market and your product is well-positioned. You should also share customer testimonials and recommendations to help to convince potential buyers that your product is gaining traction.
It’s also important to update your data space regularly to show that you are dedicated to transparency and communication. This could be in the form of a monthly or quarterly report, which outlines the major highlights and highlighting any important metrics. Some companies even provide a KPI dashboard, which proves that they’re dedicated to maintaining a constant dialogue with their investors.
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