What Is a Virtual Data Room?
A virtual dataroom (VDR) is a cloud-based repository that stores documents and other files. It is used to securely transfer sensitive business information, such as during mergers and acquisitions. Due diligence processes such as fundraising rounds, due unilateral contract signing software diligence processes and financial audits are common. VDRs provide more security and control over traditional physical storage, while also reducing costs.
When selecting a VDR select one that comes with a complete and robust set of capabilities. This will satisfy your business’s needs. Take a look at, for instance, whether the platform is in compliance with ISO 27081 standards, has robust virus and spyware scanning and has the 99.9 percent uptime. Multifactor authentication can be used to ensure the data uploaded is secure. Look for customization features like color-coding to assist in identifying documents during internal meetings, or at-a glance reports that provide C-suite executives with a high-level overview needed.
A VDR is most often used during M&A transactions, where potential buyers go through a lot of documents regarding the companies that are being sold. M&A virtual datarooms enable an efficient due diligence process and reduce risk because they restrict access to confidential information to those who are required to access it. In an M&A transaction, users also benefit from the ability to work effectively by using a VDR’s Q&A and comments sections. This increases productivity and speeds decision-making. Moreover, M&A VDRs enable you to keep complete and thorough audit trails, which is a must for M&A due diligence.
