Three versions of the same agreement, and the two months it cost

The commonest way to lose two months on a round starts like this. A founder does not so much build a data room as declare one: the week the term sheet arrives, everything he has goes into a single shared folder. Several hundred files, no index, three versions of the same shareholders' agreement with nothing to show which one was signed, and a payroll export with names, home addresses and absence records. The investor's counsel spends a fortnight building a question list instead of reading the business. The round closes late, at the same valuation but with tighter conditions and a smaller cash-out. A data room is the one part of a transaction where preparation converts directly into speed, and speed protects your price.

What a buyer or an investor is actually asking for

The request list is not a curiosity exercise. It is derived, almost line by line, from the promises the other side intends to ask you to sign. A buyer's list comes from the representations and warranties in the draft SPA. An investor's list comes from the warranties in the subscription agreement and the conditions to be met before money moves. Every folder exists so someone can verify one statement you are about to make about your own company.

The due diligence data room checklist an adviser sends you is therefore no secret, and it barely changes from deal to deal. Corporate files prove who owns what and that the shares being sold exist as described. Financial files test whether reported earnings are the earnings the business generates. Commercial files show whether revenue survives a change of control. People, intellectual property, tax and social security, disputes, permits and insurance each carry their own warranty, and each gets a folder. Read your file list next to how due diligence actually runs in Belgian M&A and the logic stops looking arbitrary.

The role of the data room in M&A and in fundraising is the same, but the emphasis differs. An M&A data room checklist digs into history, because the buyer inherits it. A fundraising list presses harder on the forward case, because the investor is buying that. One well built room serves both, which matters on a dual track, and our M&A preparation checklist shows where the two diverge.

Data room structure: tiers rather than folders

Most people take a data room checklist, turn every heading into a folder, upload what they can find, and wonder why the questions never stop. A room that works is built as an index: numbered, fixed, one place per document, no renumbering once a party is inside. Renaming folders halfway through costs a week.

Three habits do most of the work. One document per file, named with the date, the counterparty and whether it is signed or a draft. A master index with a status column, so you know what is in, what is missing and who owns the gap. Every question and answer logged inside the room rather than in email, so the same answer reaches every party and you keep a record of what was disclosed. That last habit comes back at the end: what sits in the room at signing is broadly what the buyer is deemed to know, and it shapes what you can still be pursued for.

Staged disclosure: who sees what, and when

Staged disclosure means access follows commitment. Nobody reaches the sensitive material because they signed a non disclosure agreement. They reach it because they made an offer that survived contact with your numbers.

Tier one opens at first round offers and holds the filed accounts, the group structure, revenue split by customer type, payroll by function and the contract templates. Tier two waits for a signed letter of intent or term sheet with exclusivity, and adds the management accounts and the bridge to filed accounts, the named top contracts, tax and social security returns, IP filings and employment terms by function. Tier three opens only in the final weeks before signing, and that is where customer pricing, source code, named key people, litigation files and bank covenants go.

Where the counterparty competes with you, customer pricing and supplier terms go to a clean team, named individuals who report conclusions without passing the underlying detail to anyone in sales. Lenders and their advisers get their own profile and their own subset. Downloads are logged, documents carry the reader's name as a watermark, and access closes the day a party drops out rather than a fortnight later when somebody remembers.

What you can lose permanently: personal data and trade secrets

Two exposures in a data room outlive the deal itself. The first is personal data. You stay the controller of everything you upload, so minimisation applies inside the room as it does anywhere else. Replacing names with employee numbers helps, but it does not take a file out of scope: in its guidelines on pseudonymisation, the European Data Protection Board is explicit that data which can still be attributed to a person by using additional information remains personal data. Aggregate by function and seniority, keep named files to the few contracts the other side genuinely needs, and take a written undertaking that copies are destroyed if the deal dies.

The second exposure is your own confidential know-how. Under the Belgian law of 30 July 2018, which sits in the Code of Economic Law, information is protected as a trade secret only if three cumulative conditions are met, and one of them is that you have taken reasonable steps to keep it confidential. Passing your customer list or pricing model through an open link, with no access log and no watermark, weakens the argument that you ever treated it as secret. Access controls do double duty: they keep the process tidy, and they form part of the evidence that the information deserves protection at all.

The files Belgian founders routinely do not have

Almost every room we open has the same holes.

• A share register that is current and complete, showing every transfer, capital increase and option grant in order, rather than one reconstructed from notarial deeds while a buyer waits.
• Signed versions rather than final drafts, with the board and shareholder minutes for the decisions that were actually taken.
• Written assignments of intellectual property from the freelancers and agencies who wrote the code or designed the product, the gap most likely to become a condition to closing.
• Papered related party arrangements: the rent to the family property company, the management fee to the holding, the services bought from a sister company on terms nobody wrote down.
• A reconciliation between the management accounts you show and the annual accounts you filed with the National Bank's Central Balance Sheet Office, which the other side pulls before you send them anything.

Two more sit deeper: the change of control and consent clauses in your largest customer and supplier contracts, and a record of processing activities that survives a first reading. Clearing these months before a buyer exists is most of what preparing a sell-side process means.

What a missing file costs, in time and in price

A document you cannot produce does not stay a filing problem. It becomes a risk the other side has to price, and they price it in one of three ways: a cut to the headline number, a specific indemnity or escrow carved out of your proceeds, or a condition to be satisfied before the money moves. The choice among the three is theirs, not yours.

The warranty schedule is where this bites hardest. Anything you cannot evidence, you either warrant blind or exclude by disclosure, and an exclusion draws the reader's eye straight to the item you hoped to keep quiet. Sellers who understand what a warranty is worth when there is no solvency behind it build the room to defend that schedule, not merely to answer questions.

The time cost is less visible and usually larger. Exclusivity has an end date. Investment and credit committees meet on fixed calendars, and a paper chase that pushes you past one meeting costs a quarter of momentum. Meanwhile your management team answers questions instead of selling, performance dips exactly when the buyer is watching, and the dip gets priced too. On the fundraising side the same mechanism runs once the term sheet is signed and confirmatory work begins.

The dups approach

We build the room before we open the process. On a Full Deal Execution mandate the same team that indexes the documents negotiates the warranty schedule months later, which is why the index follows that schedule rather than your internal departments. The reconciliation between management accounts and filed accounts is written by the people who will be asked to defend it in month three, which is a large part of why it holds.

Where an in-house team or another adviser already runs the process, Specialist Support covers the room itself: the index, the tiering, the disclosure calendar, the clean team protocol and a single question log. We start with the uncomfortable part, listing what is missing and deciding item by item what gets fixed, what gets disclosed and what gets priced, while there is still time to choose.

If you are six months out from a round or a sale, the first useful step is finding out what is missing rather than building the room itself. Our data room due diligence checklist is the one we use on mandates, and the lines you cannot evidence today are the ones that turn into a disclosure, an escrow or a condition to closing. Give it an afternoon while nobody is waiting on you, and you'll spend far less of one explaining gaps to an investor's counsel in month three.

Questions we get asked about the data room

What goes in a data room for an M&A deal?

Corporate and ownership documents, filed and management accounts, the contracts that carry your revenue and your costs, employment and pension arrangements, intellectual property, tax and social security filings, disputes, permits and insurance. The test for each file is the same: it should let the buyer verify one statement you will be asked to warrant in the sale agreement.

Is a shared drive good enough, or do I need a data room platform?

For a small bilateral deal a shared drive can hold up, provided you control access person by person, log every download and can close access instantly. Once you have several parties, staged tiers and a competitor among them, a proper platform pays for itself quickly. The tool matters less than the discipline: an access log, watermarking, and one question log for everyone.

When should I open the data room to a buyer?

Not at first contact. Open the first tier once a party has signed a non disclosure agreement and put a non binding offer or term sheet on the table. Open the second once you have a signed letter of intent with exclusivity. Keep the most sensitive material for the final weeks before signing. Access follows commitment, in that order.

Lola Verelst, Legal Counsel at dups