Data room

Definition

The folder where a seller stages the documents diligence asked for.

Why It Matters

How it is organized tells you how prepared the sale is, and what is missing from it is a diligence finding in its own right rather than an oversight to chase quietly. Download and keep your own copy of everything as it arrives, because access is usually revoked the day a deal dies and you may want those documents if the seller comes back in six months. Watch what gets added late, too: a document that appears after you ask a pointed question is worth reading twice.

In numbers: A well-run data room for a $4,000,000 deal holds three years of returns and financials, the top-20 customer revenue list, every lease and key contract, and payroll by role. When 40% of the request list is still empty two weeks in, the diligence calendar, not the seller's story, is what slips.