What Is a Virtual Data Room?
A virtual dataroom (VDR) offers an encrypted storage space for important documents during an M&A deal. These documents include contracts or intellectual property documents employees’ information, financial statements, capitalization tables and many other documents. This will speed up the due diligence process for buyers while also helping protect the confidentiality of the selling company’s data.
Due diligence is the research that is done by a buyer potential investor to evaluate the target company’s assets prior to entering into a business transaction. The process has changed dramatically in recent years due to technological advances, especially when it involves sharing private information. Online VDRs permit companies to share online files with investors and other stakeholders.
Many online VDRs adhere to strict security protocols. They are equipped with a variety of complex layers that work in together to create a wall against potential threats. They include physical security – including continuous backup and data siloing to private cloud servers, multi-factor authentication, accident redemption – and application security, which includes encryption techniques such as digital watermarking, audit trails of all activities within the data room, and more granular permissions that allow custom folder structure.
Another feature that separates a VDR from other VDRs is its ability to integrate into existing processes and systems. This allows users to utilize their preferred tools and applications to accomplish the task at hand, reducing errors and streamlining the process of M&A transactions. Certain VDR providers also offer cheaper plans dependent on the amount data uploaded to the platform, the number of users, the size of storage, as well as the duration of project. This can help companies avoid costly overages and charges.