A data room for a business worth a few million, not a few billion.
What a data room is actually for at this size, when a shared drive is genuinely enough, and what changes the moment a second buyer appears.
When a shared drive is genuinely fine
One buyer, a dozen documents, a deal you expect to close in weeks: a folder you share and later delete does the job. Anyone selling you a data room at that size is selling you a feeling of seriousness rather than a capability you will use.
The reason to move is not size. It is the moment a second buyer appears, because from then on the question stops being how to send files and becomes who saw what.
What changes when a buyer starts asking
A diligence request list arrives as a numbered document, and it does not arrive once. It arrives, then it is followed by questions about what you sent, then by a second list from the buyer's accountant. A folder handles the first round and starts to fail on the third.
Four things a drive cannot do: expire access on a date, revoke it from one person without disturbing everyone else, tell you which documents were actually opened, and mark a document so a copy can be traced back to whoever it was given to.
How ours works
Upload the documents you have. The ones carrying figures are read and fed into the valuation, so the same accounts do two jobs rather than being filed twice. The rest are stored and shareable.
Sharing is a link that expires, tied to an email, with a log of what was opened. Access is withdrawn per person, not per folder.
Questions
- Do I need a virtual data room to sell a small business?
- Often not. Below roughly a million in value, with one buyer and a handful of documents, a shared folder is usually enough. What a data room adds is control: who opened what and when, access that expires, and the ability to withdraw a document from someone who is no longer in the process. Those matter once you are talking to more than one buyer.
- Can I just use Google Drive or Dropbox for due diligence?
- You can, and many deals do. The limits show up in specific moments: when a buyer walks away and you want their access gone, when two buyers must not see each other, when you need to know whether anyone actually opened the accounts, and when a document leaks and you need to know who had it.
- What goes in a data room for a business sale?
- Financial statements, tax returns, management accounts, the customer contracts, the lease, payroll, insurance, and the corporate records. The full list is in our due diligence document checklist.
- Why does every list of the best data rooms disagree with the last one?
- Because most of them are advertising. Ranked lists in this category are frequently affiliate pages, and some are run by the vendors being ranked. Read them for the feature vocabulary, not for the ranking.
We sell a data room, so treat the section above on when you do not need one as the part worth checking against your own situation.