What Is a Virtual Data Room?
A virtual dataroom (VDR) provides the security of a platform to store important documents in an M&A deal. These documents could include contracts and intellectual property information, employee information capitalization tables, financial statements and many other documents. This can accelerate the due diligence process and protect the privacy of information from the selling company.
Due diligence is the process of research done by a prospective buyer or investor to evaluate the potential company and its assets prior to engaging in the process of negotiating. This process has shifted drastically in recent years because of technological advancements and especially when it involves sharing confidential information. Instead of having a physical room filled with filing cabinets that can be closed and opened by different people online, VDRs are now accessible online. VDRs are the new method for companies to share files with investors and other stakeholders.
Many online VDRs adhere to strict security protocols. They’re equipped with intricate layers that work combination to create a barrier against potential threats. Physical security is a matter of continuous backups as well as data silos on private cloud servers, multiple-factor authentication and redemption for accidents. Application security is a combination of encryption techniques, digital watermarking, audit trails, and permissions to allow for a custom folder structure.
Another major feature that differentiates a VDR from other VDRs is its ability to be integrated into existing systems and business processes. This allows users to use their preferred tools and applications to complete the task to reduce errors and speed up the process of M&A transactions. Some VDR providers also offer cheaper plans based on the amount of data that is uploaded to the platform and the number of users, the size of storage, and the duration of project. This can help companies avoid unexpected charges and overages.
