February 20, 2024
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With cutting-edge online solutions, organizations can streamline the due diligence process, foster better collaboration among stakeholders, and easily manage vast amounts of data. So, if you want to get a competitive edge, explore due diligence software solutions.
In this article, we will discuss how the software facilitates due diligence tasks, manages risks, and simplifies the transaction. Plus, you will explore the best solutions to use in 2024.
What is due diligence software?
Due diligence software is a centralized platform that streamlines the due diligence process by allowing participants to manage documents, securely store virtual data, share confidential information without risks, and facilitate collaboration and communication with third parties.
Next, you can check how the solutions work through a prism of principal due diligence tasks.
The key tasks that are solved with the due diligence software
Businesses employ the software to streamline the following:
1. Document management
Compiling, sharing, and assessing relevant documentation is the core of due diligence. So, due diligence software functionality streamlines data organization, categorization and management, enhancing deal efficiency.
2. Secure storage and file-sharing
Data breaches, cyber-attacks, and unauthorized access can destroy the deal. The best due diligence platforms offer protected and controlled storage with data encryption in transit and at rest, permission settings, and adherence to data privacy regulations. Also, solutions feature sophisticated mechanisms that ensure sensitive information is shared only with authorized users.
Business climate: The number of bank CEOs who feel prepared to deal with cyber-attacks has decreased from 66% in 2022 to 54% in 2023. The reasons are more sophisticated attackers, a shortage of skilled personnel, and a lack of investment in cyber defenses. At the same time, only 7% of CEOs reported not prioritizing cybersecurity in their business.
3. Multiple-party collaboration
Due diligence solutions simplify the task of effective collaboration for multiple stakeholders by providing project management functionalities, communication spaces, and collaboration features. Thus, participants can effectively communicate and collaborate, coordinating efforts within a platform.
Business climate: Collaboration software market revenues exceeded 16.1 billion dollars in 2022 and are forecasted to reach 52.9 billion in 2032, indicating high demand among companies.
Now, let’s explore the most popular solutions companies employ today.
Types of software used during a due diligence process
Today’s key due diligence solutions are virtual data rooms and GRC software. Here’s a brief overview of each digital tool:
1. Virtual data rooms
A due diligence virtual data room is a highly secure and compliant platform featuring cutting-edge tools to manage data, store and share confidential documents, collaborate, communicate, and meet industry and government regulations during the due diligence process.
Data rooms offer the following:
- A central repository for storing and organizing due diligence documents, facilitating comprehensive review and analysis by authorized parties
- Collaboration and communication features such as secure private and group messaging, Q&A modules, commenting, annotation, and secure messaging for real-time interaction and data sharing
- Security control and reporting functions for accessing compliance with regulations and evaluating risk factors
2. GRC software
Governance, Risk, and Compliance (GRC) solution is a platform to assess a target company’s compliance with relevant laws and regulations, identify potential risks, and evaluate the effectiveness of its internal controls and governance structures.
GRC software offers the following:
- Document management capabilities, which are typically part of functionalities focused on compliance management, policy enforcement, and risk assessment
- Communication and collaboration tools geared toward internal stakeholders responsible for managing compliance and risk within an organization
- Advanced tools for identifying compliance gaps, assessing risks, and implementing controls to mitigate them throughout a due diligence process
Although both platforms can assist with your due diligence workflow, their primary purposes and functionalities differ, which we will demonstrate by exploring top software solutions further on.
How the due diligence software helps to address the due diligence risks
Relying on Deloitte’s extensive business intelligence, we’ve gathered the most acute due diligence risks and challenges to show you how software solutions help solve them.
| Risks | Software solutions |
| Inaccurate background information (experience and competence, track record, shell companies for money laundering, collusion with employees, etc.) | By consolidating all information in one space, the software presents only up-to-date and accurate data to stakeholders. Furthermore, it employs various data sources and algorithms to identify discrepancies and red flags in the background information. Also, due diligence management software may include features for verifying data reliability, including integration with third-party databases and validating information provided by a target company or third parties. Key features: Centralized data storage Automated data analysis Real-time updates Data validation checks Automated verification processes |
| Conflict of interest | You can address conflicts by setting up user access permissions, defining roles and responsibilities at each stage, and recording all user activity with the help of audit trails and logs. Moreover, the platforms facilitate transparent communication among stakeholders, reducing possible risks of undisclosed communications that often lead to conflicts of interest. Key features: User access permissions Detailed audit trail Document version control Communication tools |
| Litigation | Features for document review and analysis enable teams to thoroughly examine legal documents, identify potential risks or liabilities, and extract relevant information for assessment. Businesses can also use built-in risk analysis tools and checklists, which help ensure that teams systematically review legal aspects such as litigation history, pending lawsuits, regulatory compliance, and contractual obligations. Key features: Document comparison Full-text search Redaction tools Risk analysis features Due diligence checklists Consistent reporting |
| Regulatory screening | You can automate compliance checks by comparing the target company’s operations, activities, and practices against relevant regulatory requirements within a platform. This way, stakeholders can identify compliance gaps or discrepancies efficiently. Besides, some solutions monitor regulatory changes and updates in real-time and provide alerts about new or revised regulations that may impact a target company’s compliance status. It helps companies stay abreast of developments and adjust their strategies accordingly. Key features: Automated compliance checks Regulatory mapping and analysis tools Real-time regulatory updates Customizable compliance dashboards |
The table provides a general overview of the software’s capabilities. Thus, some functions listed may be more specific to either data rooms or GRC software. But since we aim to help you make the right due diligence software choice, we’ll compare the best due diligence solutions in a while.
Who needs the due diligence software?
Since the software is designed to support due diligence checks, it’s commonly used by the following companies and professionals:
1. All-size-and-industry companies
Businesses undergoing mergers, acquisitions, or strategic partnerships use the platform to assess the target’s financial, legal, operational, and regulatory aspects, mitigating risks and ensuring informed decision-making.
2. Investment firms
Investment firms, private equity investors, and venture capitalists conduct thorough analysis, evaluate investment opportunities, and assess the risks associated with potential investments.
3. Compliance officers
Legal services and compliance professionals ensure regulatory compliance, assess legal risks and conduct background checks on entities or individuals involved in business transactions.
4. Financial institutions
Financial institutions and banks conduct comprehensive analysis of financial statements, evaluate the creditworthiness of borrowers, assess the risks associated with lending transactions, and comply with regulatory requirements.
5. Government agencies
Government agencies and regulatory bodies monitor and enforce compliance with regulatory requirements, investigate potential violations, and conduct regulatory audits.
To sum up, the software is used across industries to evaluate things thoroughly, reduce risks, maintain compliance, and make informed decisions throughout business transactions, investments, and regulatory processes.
What due diligence are you in?
There are some types of procedures where due diligence software solutions are a must and used most often. They are as follows:
- Financial due diligence
- Legal due diligence
- Operational due diligence
- Regulatory due diligence
- Commercial real estate due diligence
- Cybersecurity due diligence
Finally, let’s explore top solutions to find the right due diligence software for you.
Top 7 due diligence software to use in 2024
Discover the seven industry-leading solutions, their benefits, and features to find the perfect match.
1. iDeals
iDeals due diligence data room is a premium player with its 99.95% uptime guarantee, robust data security features, 24/7/365 expert customer support, multilingual interface, and custom pricing. Also, the platform provides graphical reports and heat maps for comprehensive bidder activity representation. Finally, iDeals has a highly intuitive interface, so all parties can easily use it without preparation.
Top features:
- Multi-layered data encryption
- Secure fence view
- 8-level document access rights
- Granular user permissions
- Secure spreadsheet viewer
- GDPR compliance
- Security certifications
- Automatic index numbering
- Advanced Q&A module
- Heat map reports
- Activity dashboards
- E-signature feature
Source: Advanced Virtual Data Room Features for Deal Management
2. DealRoom
This virtual data room caters to both the sell-side and buy-side, ensuring seamless collaboration, reporting, and multi-party management throughout the due diligence process. Furthermore, this digital tool can integrate with your existing systems, including Google apps, Microsoft Office, and Slack for faster operation.
Top features:
- 256-bit AES data encryption
- Multi-factor authentication
- Drag-and-drop upload
- Built-in Excel viewer
- Risk flagging
- Template automation
- Deal request tracker
- Document activity dashboards
Source: Secure Online M&A Virtual Data Rooms by DealRoom
3. DD360
With DD360, wealth management groups, asset managers, outsourced chief investment officers, asset owners, and consultants can efficiently manage their due diligence tasks and stay on top. For this, the solution offers workflow automation, collaboration, and automated report-generation tools. Furthermore, users can manage issues, extract specific answers, pre-populate responses, and track clients’ report usage, all from a centralized platform.
Top features:
- Document management
- Real-time data
- Workflow management
- Reporting and statistics
- Customizable reports
- Benchmarking
Source: DD360 Reviews, Pricing & Ratings | GetApp NZ 2024
4. ShareVault
ShareVault is a feature-rich virtual data room featuring secure file-sharing, tracking, and reporting tools combined with ease of use. Other provider’s benefits are quick data room setup, affordability, and 24/7 technical support.
Top features:
- Granular access controls
- Secure batch download
- Auto-numbering with freeze index
- Full-text search
- Infinite document scrolling
- Interactive user activity reporting
- IP address tracking
- Q&A module
Source: Due Diligence | ShareVault
5. Midaxo
One of the standout features of Midaxo is dedicated workspaces that allow teams to isolate while retaining centralized reporting. Also, users can eliminate risks and uncertainties with integrated technologies for overviewing the deal process from all angles. Finally, one-click reporting gives all parties the clarity to speed up the procedure.
Top features:
- Access controls
- Project and document management tools
- Customized user permissions
- Due diligence playbooks
- Preconfigured real-time dashboards
- Workflow automation
Source: M&A Due Diligence Software – Midaxo
6. Nexis Diligence
This solution is suitable for evaluating risks associated with third parties interacting with your business. Also, Nexis Diligence provides detailed information on over 200 million companies, including their legal history, enabling informed decisions for mergers and acquisitions. Plus, the platform offers risk mitigation guides and expert advice on due diligence.
Top features:
- Collection of news, regulatory, sanctions, ESG, PEP, and legal data
- Dashboards with risk information and negative news scores
- Business background screening
- Risk report builder
- AI-enabled linking
- Proactive alerts
Source: Nexis Diligence | LexisNexis Canada
7. Box
Box offers a virtual data room service that streamlines the due diligence process and encourages team collaboration across industries. The solution is renowned for its affordability and ease of use, making it an ideal solution for small businesses seeking optimal functionality.
Top features:
- FINRA and SOX compliance
- Dynamic watermarking
- 7-level content access permissions
- 1,400+ partner integrations
- 120-format file preview
- Pre-built departmental templates
For a deeper dive: Quick software comparison
In closing, we invite you to compare all these solutions by price, use cases, and free trial.
| Provider | Starting price | Free trial (days) | Use cases (due diligence +) |
| iDeals | n/a | 30 | M&A Real estate management Board communications Life Sciences Bankruptcy and restructuring |
| DealRoom | $1,495 per month | 14 | M&A Audits Multiple-party collaboration IPO |
| DD360 | n/a | ✖ | Real estate transactions Contract management Risk management Regulatory compliance |
| ShareVault | n/a | 7 | Fundraising Asset sales Biopharma partnering Investor collaborations Corporate communications |
| Midaxo | $10,000 per year | 7 | Retirement services Insurance Banking Accounting Consulting services |
| Nexis Diligence | n/a | 7 | Market research Competitive Intelligence Litigation and legal research Regulatory screening |
| Box | $15 per user per month | 14 | M&A Fundraising Asset sales and divestitures Strategic partnerships Clinical trials |
Conclusion
If you want to conduct a thorough due diligence process while keeping security, collaboration, and risk management in mind, due diligence software is your best bet. Today, the technology market offers virtual data rooms and GRC solutions, each with unique features. By thoroughly understanding your needs and the deal’s specifics, you can choose your best fit and start the process with a secure, multi-functional, and risk-resistant platform.