This piece walks through the actual folder structure boutique investment bankers use on lower middle market sell side processes. Top level folders, sub folder organization, what goes where, and how to handle sector specific variations.
The 12 top level folders every sell side data room needs
Buyers ask for the same documents in the same general order on every deal. The folder structure should anticipate that order, not respond to it.
- 01.Corporate
- 02.Financial
- 03.Legal
- 04.Customers
- 05.Suppliers
- 06.HR
- 07.Operations
- 08.IP
- 09.Real Estate
- 10.Tax
- 11.Compliance
- 12.Insurance
Each top level has 4 to 8 sub folders. Some get more depth on specific deals (manufacturing has heavier Operations; SaaS has heavier IP; healthcare has heavier Compliance).
Folder by folder: what goes where
Corporate
The legal entity context. Who owns what, who governs the business.
- Articles of Incorporation and bylaws
- Shareholder agreements and cap table
- Board minutes and resolutions
- Equity holders list with addresses
- Any prior M&A activity (acquisitions, divestitures, restructuring)
- Subsidiary org charts
Financial
The numbers the deal is priced on. Heaviest single folder in any data room.
- Audited financial statements (last 3 to 5 years)
- Monthly management reports (last 24 months)
- Year to date current period reporting
- Annual operating budgets
- AR aging and collections
- AP aging and payment patterns
- Working capital trend analysis
- Capex history (with maintenance vs growth split)
- Revenue by customer (top 20)
- Revenue by product or service line
- Gross margin analysis by SKU or service
- Quality of Earnings report (sell side QofE if produced)
Legal
Contracts, litigation, regulatory.
- Material customer contracts (top 20 by revenue)
- Material supplier contracts (top 20 by spend)
- Lease agreements
- Loan agreements and credit facilities
- Equipment financing agreements
- Litigation history and current matters
- Regulatory correspondence
- Settlement agreements
- Pending claims or disputes
- Legal opinions
Customers
The single biggest source of buyer concern in most deals.
- Top 20 customers by revenue (last 3 years)
- Customer concentration analysis (Pareto chart by revenue %)
- Customer retention by cohort
- Customer contracts (organized by customer)
- Customer profitability analysis
- Customer pipeline / forecast
- Reference customers (with seller permission)
- Recent customer wins and losses
Suppliers
The flip side of customers.
- Top 20 suppliers by spend
- Supplier concentration analysis
- Supplier contracts
- Single source dependencies (critical risk)
- Supplier credit terms
- Recent supplier disputes or terminations
HR
People and comp.
- Org chart (current and recent history)
- Employee headcount by function
- Compensation structure (anonymized initially, identified at Phase 3)
- Benefits programs and costs
- Employee handbook
- Any pending HR disputes or claims
- Stock option grants and vesting (if applicable)
- Non compete and non solicit agreements
Operations
Sector specific. Manufacturing has heavy Operations folders. SaaS has light ones.
- Manufacturing: production capacity, inventory, quality systems, equipment list, maintenance schedules, process documentation
- SaaS: engineering team structure, tech stack, uptime/SLA metrics, customer support metrics, feature roadmap, security incidents
- Industrial services: route data, contract length, equipment condition, environmental compliance
IP
Patents, trademarks, trade secrets, IT systems.
- Patent filings and grants
- Trademark registrations
- Copyright registrations
- Trade secret protocols
- Open source software usage
- Software license inventory
- IT systems documentation
- Domain names and email infrastructure
Real Estate
Properties owned or leased.
- Owned property deeds
- Lease agreements
- Property condition reports
- Environmental assessments (Phase I or Phase II ESAs)
- Property tax history
- Real estate appraisals
Tax
Federal, state, sales, property.
- Federal tax returns (last 5 years)
- State tax returns
- Sales tax filings and audit history
- Property tax records
- Tax election history (S corp, C corp, LLC structures)
- Net operating loss documentation
- Tax credit history (R&D, energy, etc.)
- Pending tax audits or disputes
Compliance
Sector specific.
- Healthcare: HIPAA, OIG exclusion lists, state licensing
- Financial services: Reg S-P, FINRA, state regulator filings
- Government contractors: ITAR, Federal Acquisition Regulation compliance
- Food and beverage: FDA, USDA inspection history
Insurance
D&O, liability, cyber.
- Current insurance policies (D&O, general liability, cyber, E&O)
- Claims history (last 5 years)
- Insurance certificates
- Workers comp history
- Recent renewal correspondence
Mapping to the standard buyer diligence request list
The buyer's outside counsel sends a diligence request list within 24 hours of LOI signing. The list typically has 200 to 400 line items. Each line item maps to a specific document or folder in the data room.
If your data room is structured as above, every line item has a clear answer. The buyer's team logs in, finds what they need, moves on. No "give me a few minutes" emails.
Permission tiers by folder
Three tier model:
Phase 1 (pre-LOI, anyone with NDA): Anonymized financials (P&L, balance sheet, key metrics), anonymized customer concentration, market overview, anonymized HR overview, public legal entity info.
Phase 2 (post-LOI, exclusive buyer): Full historical financials with names, identified customer contracts, specific supplier agreements, full HR data structure with anonymized salaries, tax returns, all folders except sensitive employee comp and related party.
Phase 3 (closing diligence): Sensitive employee compensation, sensitive customer contract terms, related party transactions, litigation strategy, any other genuinely sensitive material.
Sector specific variations
Different sectors weight folders differently.
- Manufacturing: heavy Operations and Real Estate (capacity, environmental). Working capital subfolders in Financial.
- SaaS: heavy IP (open source compliance, security) and Operations (engineering, uptime). Light Real Estate.
- Healthcare services: heavy Compliance (HIPAA, payer mix), heavy HR (physician contracts, compensation), MSO structure documentation in Corporate.
- Insurance services: heavy Customers (book of business, retention), heavy Compliance (state licensing). Light Operations.
- Building products: heavy Operations (route density, equipment), heavy Customers (recurring contracts, retention).
- Professional services: heavy HR (partner compensation, retention), heavy Customers (concentration, partner attribution).
- Industrial services: heavy Operations (route data, contract length), heavy Real Estate (facilities), heavy Compliance (environmental).
- Consumer: heavy Operations (supply chain), heavy IP (brand, trademarks), heavy Compliance (FDA/USDA).
Common mistakes
- Building structure around document arrival order. Documents arrive randomly through pre-sale planning. Folder structure should be built around buyer diligence order, not seller convenience. Reorganize once before going to market.
- Phase 2 access too broad. Once you give one buyer Phase 2 access, the temptation is to open it for everyone. Resist. Phase 2 access for non-LOI buyers exposes the seller's downside without commercial benefit.
- Slow document upload velocity. Buyer's QofE provider asks for additional documents during exclusivity. Banker delays mean QofE schedule slips. Set expectations with seller upfront: 24 hour turnaround on diligence requests.
- No customer concentration disclosure upfront. Customer concentration is the single biggest source of retrade in LMM deals. Disclose it in the CIM. Show it in Phase 1 anonymized data. Surfacing it upfront removes the buyer's "discovery" leverage.
- Skipping the data room launch test. Before inviting any external user, log in as a sample buyer and click through. Find the document a buyer would request first (typically trailing 12 months P&L) and time how long it takes to find. If it's longer than 30 seconds, restructure.
Data Room Folder Structure Template
Skip the "what folders should we have" debate. The LockRoom folder structure template maps to the standard buyer diligence request list. 13 folders, 63 subfolders, free, no email gate.