A business valuation with data room is an essential part of due diligence, and is arguably the most important element in the M&A process. A comprehensive and organised virtual data room can be the difference between a deal closing or not. It provides investors with confidence that they won’t encounter any hidden unexpected surprises.
The contents of your data room must include the essential documents that are typical for most fundraises: a pitch deck, the basic financials (cash metrics as well as revenue projections and a cap table) as well as past investor updates, and an up-to date list of happenings and commitments. Your VC may also want to review your legal documents, which include your term sheet and agreements with other investors, any existing loan agreements, and the most up-to-date company documents, such as a copy of your amended or restated articles of incorporation as well as resolutions on the board.
Another crucial document to present is your competitive analysis, which shows that you have a thorough understanding of your market and that your product is strategically placed. References and customer reviews will assure buyers that your product is properly positioned.
It is also essential to update your data space regularly to show that you’re committed towards transparency and communication. This could be in the form of a quarterly or monthly report that focuses on the top highlights and any other key metrics. Some companies also have their own KPI Dashboard, which indicates that they are committed to engaging with their investors.