When a deal moves into due diligence, the document work stops being routine file sharing. Suddenly you are managing confidential contracts, regulatory filings, commercial data and personal information under tight timelines and scrutiny. Many teams still try to run this phase on tools like Google Drive, OneDrive, Dropbox or generic SharePoint folders. It usually works until it does not.
Traditional cloud storage was built for everyday collaboration, not for high-stakes disclosure. The gaps only become visible when an investor, buyer or regulator starts asking hard questions about access, audit trails and data protection.
What due diligence actually needs from a document platform
To understand why generic tools struggle, it helps to list what a serious due diligence process requires:
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Strict role-based access, often by workstream and bidder
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Full visibility into who viewed, downloaded or changed each file
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Strong protection against accidental sharing or forwardable links
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Clear data residency and retention controls
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Deal-specific workflows such as Q&A, staged disclosure and redaction
Cloud storage solves only a small part of this. It stores and syncs documents. It lets people collaborate. It rarely provides the governance layer that modern dealmakers and regulators expect.
Permission sprawl: “anyone with the link” is not a control
In a live transaction, hundreds of files pass through different teams and external parties. With traditional cloud storage, access control often relies on:
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Shared folders that accumulate more and more users
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“Anyone with the link” settings that are hard to track later
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Local sync clients that silently copy files to personal laptops
This makes it difficult to answer basic questions such as:
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Which individuals from Bidder A saw the HR files?
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Did any external advisor still have access after the deal was paused?
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Which version of a key contract did the buyer actually review?
A retrospective review by the UK Information Commissioner’s Office notes that a high number of cloud security incidents can be traced back to preventable misconfigurations by end users, especially around access settings and sharing. That is exactly what permission sprawl looks like in day-to-day deal work.
Weak audit trails and limited oversight
Most cloud drives can show that a file was edited or shared. Due diligence requires more granularity. You may need to prove:
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When a specific bidder first accessed a sensitive document
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Whether someone downloaded material beyond their remit
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Which documents triggered the most interest from a particular buyer
Cybersecurity guidance increasingly treats data-level logging as part of due diligence. Reuters has described cybersecurity due diligence as “non-negotiable” in M&A and highlights the need to verify a target’s security posture, data privacy compliance and risk management practices as part of the transaction.
Standard cloud storage logs are rarely designed to withstand that level of scrutiny. They can be fragmented across admin consoles, user accounts and third-party integrations. Reconstructing a clear picture for lawyers or regulators becomes time-consuming and sometimes impossible.
Cloud misconfigurations and the cost of simple mistakes
Due diligence data is usually stored in the cloud anyway. The question is whether that cloud is configured for controlled disclosure or for everyday collaboration.
Recent research on data breaches shows how fragile generic setups can be. IBM’s Cost of a Data Breach 2024 report puts the global average cost of a breach at around 4.88 million US dollars, with even higher figures in financial services. IBM Cloud misconfiguration consistently appears among the common root causes of incidents.
In a deal context, a single exposed folder, public link or badly configured sharing policy can turn into:
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Regulatory investigations
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Contractual claims from counterparties
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Renegotiated price or, in extreme cases, a failed transaction
Generic cloud drives provide building blocks. They do not prevent a busy deal team from using those blocks in unsafe ways.
No built-in deal workflows
Due diligence is not only about storing files. It is a process with its own patterns:
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Staging disclosures in waves as comfort increases
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Segregating information between multiple bidders
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Centralising and tracking questions and answers
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Applying redactions to sensitive fields
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Locking the archive once the transaction is complete
Traditional cloud storage tools do not recognise these patterns. Teams often try to recreate them with ad-hoc folder structures, spreadsheets and long email threads. The result is friction, duplicated work and a higher chance of oversight.
By contrast, a purpose-built (VDR) data room can embed these workflows into the platform. Q&A, bidder groups, granular permissions and audit reporting become part of the core product rather than manual workarounds layered on top.
Why this matters for valuations and risk
For buyers, weak document governance in due diligence is a red flag in itself. It raises questions about how the target handles customer data, intellectual property and compliance in the rest of the business.
For sellers, relying on generic cloud storage increases several risks:
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Pricing risk if late-stage issues or leaks undermine confidence
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Timeline risk if poor structure or logging slows down reviews
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Reputational risk if sensitive data appears outside the intended circle
In a market where dealmakers are urged to extend due diligence into cybersecurity and data governance, the quality of your document environment sends a signal about your overall maturity.
Moving from “shared drive” to “transaction-grade” infrastructure
None of this means cloud storage should disappear from your stack. It remains a useful space for internal collaboration and working drafts. The problem starts when the same tools are used as the final environment for regulated, cross-organisational disclosure.
The more complex the deal, the more important it is to separate:
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Work-in-progress spaces for internal teams
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Transaction-grade environments designed specifically for due diligence, such as a (VDR) data room
That separation allows you to keep the ease of modern cloud tools while giving buyers, investors and regulators the level of control, logging and security they increasingly expect.
Traditional cloud storage helped organisations become more digital. Due diligence now needs them to become more disciplined as well.