Avoid these VDR setup errors before it’s too late

5 Common Mistakes When
Setting Up a Virtual Data
Room (and How to Avoid
Them)

Virtual Data Rooms (VDRs) have become indispensable for businesses handling sensitive data, particularly in
sectors like mergers and acquisitions (M&A), due diligence, legal proceedings, and intellectual property
management. A well-structured VDR enhances data security, facilitates seamless collaboration, and ensures
efficient data sharing. However, many businesses encounter pitfalls when setting up their VDR, leading to
inefficiencies and potential security vulnerabilities.
Failing to Define Objectives and User Needs
The Mistake:
One of the most frequent errors businesses make is jumping into the setup process without a clear
understanding of the objectives for using the VDR. Whether it’s for due diligence, collaboration on legal
matters, or storing sensitive documents, failing to define objectives often leads to a lack of direction.
Additionally, overlooking the specific needs of different user groups—such as investors, auditors, or legal
teams—can result in an inefficient or poorly organised data room.

How to Avoid It:
Before setting up your VDR, identify the primary purpose and the stakeholders who will use it. Ask the
following questions:
• What specific outcome do we want to achieve?
• Who will access the VDR, and what are their roles and permissions?
• What types of files will be uploaded, and how should they be categorised?
By aligning your setup with the needs of your stakeholders, you’ll create a streamlined experience, ensuring
everyone can access the documents they need without confusion or delays.

Neglecting Proper Folder
Structure and File
Organisation

The Mistake:
A common oversight during the setup process is failing to organise files and folders effectively. Dumping
large volumes of files into a single folder or creating an overly complex structure makes it difficult for
users to locate information quickly. This can frustrate users and waste valuable time, particularly in time-
sensitive situations like M&A due diligence.
How to Avoid It:
Develop a clear and logical folder structure that reflects the nature of your project. For instance:
• Use broad categories like “Financial Documents,” “Legal Agreements,” and “Operational Data” as
top-level folders.
• Subdivide these categories further, such as “Tax Records,” “Balance Sheets,” and “Profit & Loss
Statements” under “Financial Documents.”
Additionally, use consistent naming conventions for files and folders. Include key details in filenames, such
as dates or document versions, to make retrieval faster. Many VDR platforms, including top providers,
offer templates to simplify this process—leverage them where possible.

Assigning Inappropriate Permissions
The Mistake:
Another common mistake is granting users unnecessary access or failing to tailor permissions to individual
roles. Giving all users full access to sensitive documents increases the risk of data breaches, while overly
restrictive permissions may hamper collaboration and productivity.
How to Avoid It:
Use the role-based permission settings available in your VDR to ensure each user has appropriate access. For
example:
• View-Only Access: Restrict access to users who only need to review documents without downloading,
editing, or printing them.
• Full Access: Grant this level of access to project managers or administrators who need full control over
the VDR.
• Custom Permissions: Tailor specific permissions for stakeholders who may need varying degrees of
access.
Regularly audit user permissions to ensure they remain appropriate as the project evolves. This proactive
approach reduces the risk of accidental data leaks and ensures compliance with privacy regulations.

Overlooking Security Features
The Mistake:
While VDRs are known for their robust security, simply relying on default settings can leave your data
vulnerable. Overlooking features like encryption, two-factor authentication, and activity tracking compromises
the integrity of your data room.
How to Avoid It:
Take full advantage of the security features offered by your VDR. Implement the following measures:
• Data Encryption: Ensure all files are encrypted during storage and transmission to protect against
unauthorised access.
• Two-Factor Authentication (2FA): Require users to verify their identity using a secondary method, such as
a text code or email link.
• Watermarking: Use dynamic watermarks to deter users from sharing or misusing documents.
• Activity Tracking: Enable audit trails to monitor user activities, such as document access and downloads.
This feature ensures transparency and helps identify any unusual behaviour.
By leveraging these tools, you can minimise the risk of data breaches while demonstrating compliance with
regulations like GDPR and other data protection laws.

Failing to Test the Data Room Before Launch
The Mistake:
Many organisations skip testing their VDR after setup, leading to avoidable issues when the data room goes
live. This oversight can result in technical glitches, misconfigured permissions, or overlooked documents,
ultimately delaying important processes.
How to Avoid It:
Before launching your VDR, conduct a thorough test to ensure it functions as intended. Key areas to focus on
include:
• User Experience: Ask a sample group of users to navigate the VDR and provide feedback on the folder
structure, file accessibility, and general usability.
• Permissions Testing: Verify that users can only access the files and folders appropriate for their role.
• Functionality Check: Test key features like file uploads, downloads, and search functionality to confirm
they work seamlessly.
Address any issues identified during testing to ensure the data room is fully operational before inviting
stakeholders.

Conclusion
In the high-pressure environment of an IPO, data security is a non-negotiable priority. Virtual Data Rooms
provide a secure platform for managing the extensive documentation involved, offering features like end-to-
end encryption, granular access controls, and dynamic watermarking to protect sensitive information.
Setting up a Virtual Data Room requires careful planning, attention to detail, and a clear understanding of your
organisation’s needs. By avoiding common mistakes such as undefined objectives, poor file organisation,
inappropriate permissions, and overlooked security features, you can ensure a smooth and secure experience
for all stakeholders. Moreover, thorough testing before launch minimises disruptions and enhances user
satisfaction.
When choosing a VDR provider, it’s equally crucial to opt for a platform designed with user-friendliness, security,
and scalability in mind. This is where DocullyVDR stands out. Known for its unmatched security features,
intuitive interface, and industry-leading document management capabilities, DocullyVDR offers a
comprehensive solution tailored to the unique needs of businesses. With customisable permissions, advanced
analytics, and 24/7 support, DocullyVDR ensures your data is secure and your workflows are optimised. Ready
to revolutionise your document management? Partner with DocullyVDR today.
When selecting a VDR provider for your IPO, you need a partner that prioritises security without compromising
on efficiency. DocullyVDR offers a comprehensive suite of features tailored to meet the rigorous demands of the
IPO process. With 256-bit AES encryption, two-factor authentication, robust compliance with global standards
like GDPR and ISO 27001, and up to 60% faster data uploads, DocullyVDR ensures that your confidential data
remains protected throughout the journey to going public. Trust DocullyVDR to provide the highest level of
security and support for your IPO, helping you achieve a successful and seamless transition to the public
market.

Avoid these VDR setup errors before it’s too late

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