In 2024, due diligence trends will be shaped by regulatory pressure, cross-functional efficiency, and AI integration. What it all comes down to is that regulatory changes heighten the need for thorough due diligence, focusing on risk-based approaches and ongoing monitoring. Cross-functional teams, in turn, become even more crucial for streamlining efforts. Finally, despite challenges like privacy concerns and misinformation, AI emerges as a potential game-changer.
As leaders navigate these trends, employing advanced digital solutions becomes a critical necessity. So, this article explores due diligence management software that streamlines compliance, strengthens collaborative efforts, and protects your security.
What is a due diligence platform?
Due diligence software is a highly secure and feature-rich digital solution that streamlines the procedure by serving the following purposes:
- Centralized storage – provides a single protected space for storing, organizing, and accessing relevant documents.
- Collaboration hub – facilitates collaboration and communication among multiple M&A stakeholders and key decision-makers from acquiring and target companies.
- Document management system – features AI-powered data management tools, allowing users to upload, categorize, review, and track documents.
- Compliance capabilities – includes reporting and compliance functionalities to ensure adherence to regulatory requirements and industry standards, including GDPR, HIPAA, and SOC.
- Advanced security features – incorporates robust data protection mechanisms to protect sensitive information and maintain confidentiality.
Typically, the solution is used in M&A due diligence by business executives, legal advisors, asset managers, financial analysts, compliance professionals, investment bankers and consultants. With it, they oversee the deal process, review legal documents, analyze financial statements, ensure regulatory compliance, facilitate investor relations, and coordinate due diligence activities.
Top 3 data rooms
Overall rating:
4.9/5
Excellent
Overall rating:
4.7/5
Good
Overall rating:
4.6/5
Good
What challenges does a due diligence platform solve?
Here are the most common due diligence pains that the software eliminates and thus protects businesses from legal liabilities, reputational damage, and financial loss:
1. Cost optimization
With M&A transaction costs ranging from 1% to 4% of the deal value, due diligence solutions optimize costs associated with printing, mailing, and storing physical documents. Furthermore, organizations can reduce operational expenses, including traveling and physical data room rent.
2. Project management
Clear objectives, effective resource allocation, established timelines, and progress monitoring ensure organized deal flow. Created with M&A due diligence in mind, the software allows project managers to securely share resources, monitor tasks, and ensure timely completion of activities.
Is the tool you are using now good for due diligence management?
You may already be using Monday.com or Asana to connect employees and organize tasks. However, these project management tools are designed mainly for marketing teams, HR departments, and creative agencies.
On the other hand, due diligence software is built with the procedure at the core. So, it includes all necessary project management functionality combined with detailed user tracking, automated report generation, activity analysis, robust security, and customized workflows.
3. Progress tracking
The platform due diligence users get extensive progress monitoring tools to closely track the status of multiple tasks and milestones in real-time down to the second. This way, they promote accountability and facilitate timely interventions and adjustments.
4. Adaptation for specific industries
The software can be customized to meet specific regulations and needs of different industries. For example, healthcare platforms include HIPAA compliance checks and modules for patient data security.
5. Activity review
A vendor due diligence platform enables a thorough review and analysis of activities related to the procedure, including documentation, data analysis, and risk assessments. In addition, users can access detailed reports and audit trails, which facilitate informed decision-making and regulatory compliance.
| When there are no tools for a thorough review: Caterpillar purchased ERA Mining Machinery Ltd. for $677 million in 2012 to expand in the Chinese coal market. However, due to accounting misconduct at Siwei and due diligence oversights, Caterpillar took a $580 million write-down in 2012. It remains one of the worst mergers in history. |
6. Secure document sharing
Security breaches result in financial losses, legal liabilities, reputational damage, and, ultimately, M&A failures. To mitigate these risks, providers offer secure encrypted channels and granular access controls for stakeholders to collaborate and share confidential documents without risks.
7. Time constraints
Due diligence workspaces automate repetitive tasks with AI-powered features and provide intuitive real-time collaboration tools. This way, users can save time thanks to workflow automation and make decisions collaboratively wherever they are.
Now that you’ve seen how the software solves the main challenges of the due diligence process, explore how it ensures rock-solid security – one of the most crucial points for completing the deal successfully.
What are the security solutions of due diligence software?
As per the 2023 World Economic Forum’s Global Risks Report, cybersecurity is among the top ten current and potential global risks. What’s more, cybercrime is projected to cost around $10.5 trillion per year by 2025. Thus, dealmakers must be vigilant about their solutions for data-heavy deals like M&A.
Here is what users get from due diligence software for protecting data from all possible risks:
1. Access control
Administrators can assign different access levels to users, allowing them to perform only the necessary actions for their roles and tasks. In particular, admins can restrict document viewing, saving, printing, editing, sharing, and taking screenshots. This security feature ensures that only the right participants can access specific documents and prevents data misuse.
One of the providers that allows the most granular access is Ideals.
Ideals access controls ⬇
Source: How Ideals Virtual Data Room Works
2. Document security
The most secure platforms protect data through multi-layered encryption, dynamic watermarks, fence view, time and IP access restrictions, secure spreadsheet viewer, and user security impersonation.
The best due diligence software providers here are Ideals and Intralinks. However, Intralinks doesn’t feature a fence view.
Ideals fence view ⬇
Source: Ideals Virtual Data Room Review – Pricing And Features
3. Compliance
Due diligence solutions comply with data protection regulations such as GDPR, HIPAA, CPRA, ISO/IEC 27001:2013, SOC 1, SOC 2, and SOC 3, making all your procedures compliant with internationally recognized standards.
If we compare platforms in terms of compliance, Datasite has the most certifications, followed by Ideals and Intralinks.
4. Audit trails
Detailed audit trails record every action within due diligence workspaces, including document downloads, uploads, edits, and access attempts. It helps identify security breaches, providing crucial insights into what happened and who stands behind it.
In addition to a detailed activity report, vendors offer additional helpful functions. For example, Intralinks allows users to rank buyer groups based on logins and documents viewed. Ideals, in turn, provides intuitive dashboards with heat maps to assess the level of engagement among individual users or groups.
Intralinks activity dashboard ⬇
Source: Ideals Virtual Data Rooms
Intralinks activity dashboard ⬇
Source: Intralinks VDRPro Data Room: M&A Dashboard
5. Remote shred and wipe
With the remote wipe feature, an administrator can remotely lock and wipe all encrypted data from a lost or stolen device to prevent unauthorized access. Meanwhile, remote shred allows you to control the availability of each document for download by setting an exact time limit.
With Ideals, you can revoke access rights to files even after a recipient downloads them to ensure maximum security.
You have already seen the names of the top due diligence solutions, but we will now provide a detailed comparison to help you select the best software.
What are the top due diligence platforms?
Based on functionality, security, and user feedback, our experts have compiled the top solutions for due diligence participants. These providers are suitable for teams across industries, including financial institutions, healthcare, real estate, and manufacturing.
| Provider | Key features |
| Ideals | 256-bit data encryption 8-level access controls Granular user permissions Fence view Secure spreadsheet viewer Remote wipe and shred E-signature feature Advanced Q&A hubs Full audit trails Insightful activity dashboards Heat map reports Branding (workspaces, watermarks, NDAs, PDFs) |
| Capterra score: 4.8 G2 score: 4.7 | |
| Free trial: 30 days | |
| Intralinks | Two-factor authentication Granular document permissions Document access expiry AI-based document redaction View-only access Easy-to-use Q&A Audit trails Buyer interest tracking on-the-go Custom user invitation letter Managed encryption keys |
| Capterra score: 4.1 G2 score: 3.6 | |
| Free trial: ✖ | |
| Datasite | Two-factor authentication 5-level access permissions Document version control View-only access Flick-through Q&A on mobile Detailed audit trail Timeline chart widgets Custom emails and reports |
| Capterra score: 4.7 G2 score: 4.6 | |
| Free trial: ✖ |
Each listed solution can become a powerful centralized platform for your procedure. Still, we recommend exploring each in more detail on official websites, reading user reviews from your industry, and testing the product before purchasing.
What documents to upload to the due diligence platform?
Documents required for due diligence depend on the procedure type (financial, legal, commercial, or operational due diligence), industry, company size and structure, target company’s development stage, specific risks and concerns, and buyer preferences.
However, you can check our universal due diligence checklist that applies to every use case and helps you understand what potential buyers and investors expect to see in your data storage.
Key takeaways
- Due diligence software streamlines the procedure with secure data storage, collaboration tools, AI document management, compliance and robust security mechanisms.
- The platforms solve multiple due diligence challenges, including cost optimization, project management, progress tracking, and secure document sharing.
- Due diligence software provides robust security solutions through multi-level access control, data encryption, dynamic watermarks, compliance with data protection regulations, and detailed audit trails.
- Ideals, Intralinks, and Datasite are the top due diligence platforms, offering advanced features, security measures, and user-friendly interfaces tailored to the needs of due diligence participants across industries.
Visit the main page and select a provider to make your due diligence a breeze!
