28.8.2017
What is a data room? The Encyclopedia Wikipedia defines it as a „protected area where the company to be sold provides a collection of documents for the purpose of due diligence (DD)“. In this case, all the documents which the company which is to be sold wish or need to disclose to the buying company are contained in data rooms.
Colourless data rooms
It may come as a surprise that we are talking about colours in data rooms. The distinction between green and red data rooms is common in the M&A sector, but has nothing to do with a wall painting. Even less are the terms politically motivated – so much is clear.
Red or green – that is the question
It is quite simple: the colours are an indication of different access rights. Green data rooms are always accessible to all parties involved in the transaction process, but only after signature of a confidentiality declaration. Red data rooms, on the other hand, are only made accessible to a very select group of people.
Confidentiality qua profession
Access to red data rooms is usually only permitted to consultants who are already committed to secrecy on the basis of their profession. In addition to lawyers and auditors, this includes tax consultants. In many cases, red data rooms are also opened only for those bidders who are already in the last phase of the transaction process.
Colours in virtual data rooms
To summarize: The colour games in virtual data rooms regulate different access rights. A declaration of secrecy is, of course, signed by every user, irrespective of the profession.