KEY TAKEAWAYS
- Ensure DD tools provide robust security with encryption and virus scanning.
- Multi-purpose tools streamline M&A, IPO, and real estate due diligence.
- Collaboration features like live Q&A and secure messaging are essential.
- Document management must allow access control, batch uploads, and multi-format support.
In the mergers and acquisitions context, 62% of transactions fail to meet their financial objectives as a result of flawed due diligence.
Due diligence is defined as the review of data associated with a business, verification for accuracy, evaluation of business risk, and ultimately, making informed decisions. Due diligence is a risk prophylactic; a way for the parties to see the potential impending minefield, thus avoiding a potentially disastrous mistake all together.
In this article, we will discuss the important capabilities of those tools that shall facilitate due diligence in respect of security, collaboration and document management, all while facilitating a more efficient and secure process.
“DD software must be unbreachable and multi-purpose. Whether you are using the software for M&A due diligence, IPOs, or real estate, it should automate due diligence and minimize the need for third-party apps to ensure maximum security,” says Ronald Hernandez, VDR expert.
Here are some important features that the best due diligence software solutions offer.
Okay so let’s talk about security and what things you have to look for. This includes:
Two-step verification
Two-step verification acts as a secure checkpoint before granting access. Platform users are asked to use their passwords and temporarily generated codes to log in.
Non-disclosure agreements
Non-disclosure agreements are used during transactions with third parties or when adding a new user to the software. NDAs are legally enforceable documents, and if the user fails to comply with the conditions and terms mentioned in the NDA, they can be sued in a court of law.
Fence-view mode
Fence-view mode prevents screen recording, scanning, photography, and screenshots to maximize document security.
Digital watermarks
Digital watermarks are a great tool to trace any changes in a file or document. You can track who changed what and when; it ultimately helps avoid copyright issues.
256-bit AES encryption
Modern high-end due diligence tools employ 256-bit encryption (the highest standard data encryption) that provides protection during data sharing and storage.
Virus scanning
DD solutions employ the latest anti-virus software for protection against malicious files. Each uploaded file is automatically scanned, and any corrupted files are promptly removed.
· Self-destructing documents
Platform administrators or file creators can revoke document access at any moment with very short notice. Once the access is revoked, the document is automatically deleted from the device.
Certifications
Your due diligence tool must comply with important data management and security standards like ISO-27001 and SOC2. If it is an international transaction, it is important to choose a software that complies with the concerned country’s data management standards.
Communication and collaboration can’t be compromised. Featurres like:
Private messaging
End-to-end encrypted chat messengers allow users to privately send and receive messages from other users. Users can exchange documents, images, videos, audio notes, and various other files.
Live Q&As
Live Q&A sessions help answer queries of concerned parties in real-time. For example, if a user shares a proposal, other users can raise their queries in live Q&A sessions.
Audio/videoconferencing
Users can discuss important or urgent business affairs via online meeting tools. This feature enables due diligence software to facilitate audio and video meetings.
Online polls
Online polls are a great tool to get people’s opinions through voting. A member can create a poll and invite other users to record their responses. Polls are useful for approving or rejecting an idea or proposal.
Nowadays document management has become necessary. And this is what you need:
· Document access control
DD tools have access permission controls that allow administrators to define access according to the roles, responsibilities, and authorities of the users. Management can restrict user access to specific files, documents, pages, or platform sections. Administration and users can also restrict the downloading, editing, or printing of any document.
Bulk/batch uploads
The bulk uploads feature makes it easy to upload numerous files to the software repository in one go.
Drag-n-drop
Rather than searching for a file in folders, you can simply drag the file and easily upload it to the due diligence software.
Multi-format file support
You can upload audio, video, images, and documents in different file formats such as PDF, JPEG, PNG, Word file, etc. Certain due diligence solutions, such as Ideals, support more than 25 different file formats.
Accessibility can never be compromised for seamless work. You need:
· Operating systems support
Most of the well-known platforms support different operating systems like Windows, Linux, Mac, iOS, and Android.
Multi-language support
Contemporary due diligence solutions have reduced language barriers significantly. These platforms nowadays support multiple languages, including French, German, Chinese, English, etc.
No plug-ins required
High-quality due diligence solutions are complete business software that generally don’t need any additional plug-ins.
Third-party apps integration
You can also connect various third-party apps, such as Slack and Zoom, to your due diligence software. However, integrating third-party apps may compromise security.
Multiple devices accessibility
Due diligence tools are accessible from all commonly known devices, including desktops, laptops, mobile phones, and tablets.
In addition to that, ask for free trials or demos to assess the actual performance of a tool. Finally, never compromise on the quality of customer support services.
Choosing a secure and resourceful due diligence software is important to make the process seamless. Always focus on platform security and collaboration tools. Your due diligence software should be accessible from remote devices, with reliable customer support.
Why is security important to due diligence software?
Security helps minimize data leaks, stop unauthorized users, and keep transactions confidential.
What collaboration tools are useful in DD tools?
Secure messaging, audio/video calls, live Q & A and online polls is so much easier to communicate with your investment team.
How does document management help a DD tool perform better?
Access control, bulk uploads, drag and drop, and multi- format assist in managing documents better.
