Data room
M&A / Merger ModelThe controlled repository of company information bidders use to run diligence, with access logged and staged.
Also written: virtual data room, VDR
A data room holds contracts, financial records, employee data, litigation files, intellectual property and everything else a buyer needs to verify. It is virtual, permissioned, and every document view is logged.
Access is staged deliberately. The most sensitive material, customer names and pricing, detailed employee data, live litigation, is often withheld until late or restricted to a clean team of advisers, because the bidder may be a competitor and the deal may not complete.
What is not in it matters as much as what is. Diligence question logs and gaps in disclosure are where problems surface, and a seller that cannot produce a basic document is telling the buyer something about how the business is run.
It is also the evidential record. Disclosure against the sale and purchase agreement is usually made by reference to the data room, so what was disclosed there directly limits what a buyer can later claim under the warranties.
Worked example
The data room opens with 4,000 documents. Customer names, pricing and live litigation are held back to a clean team of the bidder's advisers.
Every view is logged, so the seller can see which bidder is genuinely working and which has looked at three files in two weeks.
Disclosure against the SPA warranties is usually made by reference to the data room, so what was uploaded directly limits what the buyer can later claim.