What is a data room in private equity? (2025 guide)

What is a private equity data room?

A private equity data room (also called a virtual data room, or VDR) is a secure workspace used to share sensitive documents with investors, lenders, advisors, and buyers during diligence and portfolio management. Unlike email or generic cloud folders, a VDR provides link permissions, access controls, audit logs, NDAs and analytics so you can run a disciplined fundraising or M&A process.

Why private equity teams use a VDR

• Centralizes all diligence files and versions in one place
• Adds permissioning and document-level controls (password, expiry, email verification)
• Tracks investor engagement page by page to prioritize serious buyers
• Simplifies portfolio oversight with board packs and monthly reporting
• Creates buyer-specific rooms without duplicating work

PE vs investment banking guide

What to include in a PE data room

Use this simple structure to get started. You can expand or rename folders later.

• Company overview: corporate structure, cap table, board minutes
• Financials: historical statements (3–5 years), projections, KPIs
• Commercial: customer and supplier lists, contracts, pipeline, pricing
• Legal and HR: contracts, policies, employment agreements, IP
• Product and tech: architecture, roadmap, security & compliance
• Operations: vendors, tooling, processes, SLAs

How to create a private equity VDR with Papermark (step by step)

Follow these steps to launch a professional VDR in minutes.

1. Create your Papermark account
   Visit the app and sign in. You can start free and upgrade when you need advanced features.

   

   Create account

2. Create a new data room
   Click “New data room”, give it a name (for example “Series B – PE Diligence”), and invite teammates who will upload documents.

   

3. Upload documents by folder
   Drag and drop your folders (Financials, Legal, Commercial, Product, HR). Papermark keeps structure and supports large files.

   

4. Configure link permissions
   Set password, email verification, link expiry and viewer limits. Add an NDA gate if you want viewers to accept terms before access.

   

5. Brand the room
   Add your logo, select colors, and connect a custom domain for a branded investor experience.

   

6. Share buyer‑specific rooms
   Duplicate the room for each sponsor if needed. Use granular permissions and groups to show different files to different bidders.

   

7. Track engagement and prioritize
   Use page‑by‑page analytics to see which documents and slides buyers read most. Focus follow‑ups on highly engaged investors.

   

Best practices

• Keep filenames clear and versioned (e.g., FY2024-12 P&L v2.xlsx)
• Gate sensitive folders (customer contracts, payroll) behind additional permissions
• Use buyer‑specific Q&A and keep answers in writing
• Log changes in a short “Room updates” note so everyone stays aligned

FAQ

Is a VDR required to raise from private equity?

No, but it is the standard. Sponsors expect a secure, well‑structured room with permissions, NDAs and analytics.

Can I self‑host the VDR?

Yes. Papermark offers a self‑hosted option for firms with strict data‑residency requirements.

Do I need separate rooms for each sponsor?

Not always. Many teams create one master room and use groups to control visibility; then spin up separate rooms for finalists.

Create a PE data room