Post Menu and Details.
- What is a virtual data room?
- Top 4 advantages of a virtual data room
- Reduced time and expenses
- Project activity awareness
- Ease of use
- Main features of a virtual data room
- How to choose the best virtual data room?
- Key takeaways
Reading time: ~4 minutes
Many modern companies require intuitive and effective software to optimize processes during complex transactions, due diligence, or fundraising.
A virtual data room is a solution that simplifies and facilitates a deal from preparation to execution and completion.
Find out why it’s efficient, what features VDR providers offer, and how to choose the best software for your needs below.
What is a virtual data room?
A virtual data room, also known as a deal room, is a secure online repository for document storage and sharing.
Data room services are essential for running important financial transactions or any projects requiring confidential information distribution. The use cases are the following:
- Due diligence
- Initial public offering (IPO)
- Bankruptcy and restructuring
- Portfolio management
- Board communications
- Debt financing
Industries that can benefit from VDRs are numerous. Here are a few examples:
- Media and telecommunication
- Life sciences
- Real estate
Before virtual data rooms appeared, companies stored their sensitive documents in physical data rooms. These were highly secured and constantly monitored spaces. But investors, managers, and other third parties had to travel to view the needed files.
VDRs eliminate the problem of wasting time and money on renting, maintaining, and traveling to physical data rooms. Moreover, VDRs are more secure as the documents can’t be lost, stolen, or destroyed during transit.
Top 4 advantages of a virtual data room
Let’s look at the main benefits of using data room software.
Security is always a top concern when sharing or exchanging confidential information with external parties. With that in mind, virtual data room providers created highly secured software that gives users total control over their data.
Files cannot be copied, misused, or leaked because of the following:
- Physical security. Data centers are physically protected by strict access policies and biometric entry authentication systems.
- Security certifications and compliance. VDRs earn internationally recognized security certifications, ensuring safe document storage.
- Security features. VDRs provide users with personalized watermarks, customizable NDAs, user activity tracking, and two-factor authentication features.
Reduced time and expenses
The alternatives to a virtual data room are private meetups, on-site presentations, meetings in public places, or physical data room visits. They take a lot of time and money. But with a VDR, you save on:
- Travel. No expenses on flights, accommodations, or business lunches.
- Security measures. No expenses on security equipment or salaries for security staff.
- Office supplies and equipment. No expenses for printing, copying, and storing documents.
Project activity awareness
Virtual data room’s features allow end users to fully control what’s going on with a deal, work more efficiently, and complete a transaction faster and with greater results. This is possible due to the following:
- Corporate account. Get a centralized, secure source where you can check and analyze all the project activity.
- Notifications. Receive notifications about uploaded or deleted files, new users joining a data room, questions, comments, and so on.
- Reports. Subscribe to daily, weekly, monthly, or yearly reports to review and stay up to date with the project activity.
Ease of use
An electronic data room is a simple yet full-featured and indispensable solution during complex due diligence or M&A processes. It can be opened in a matter of a few minutes and used by anyone, no matter how tech-savvy users are, due to the:
- Intuitive interface. Start using a VDR right away. In case of questions, there’s a help center, FAQ section, or live chat to contact a support team.
- Mobile apps. Access a data room from any device, anytime, and anywhere conveniently and securely.
- No plugins. View and edit documents in their native format without having to install any additional software.
Main features of a virtual data room
Here are the most important features to consider when looking for the best data room.
|Group of features||Features|
|Document upload and management||
|Activity tracking and reporting||
How to choose the best virtual data room?
Stick to the following tips when choosing online data room software.
- Define needs. Consider what you need a data room for, how much storage your project requires, and how many people will use a room.
- Identify required features. Create a list of features you need for successful deal completion. For example, do you need advanced communication features, or are basic storing and sharing enough?
- Determine the budget. Set a budget frame, as providers charge differently depending on the features and storage volume they offer.
- Read the reviews. Read their reviews and find out what other users think about a particular data room.
- Use a free trial. Test a data room by requesting a demo or a free trial and see if a solution meets your requirements.
Here’s a short overview of the article:
- A virtual data room is a secure online document storage and sharing repository. It’s used for M&A, due diligence, fundraising, IPOs, portfolio management, board communications, etc.
- The main advantages of a VDR are security, reduced time and expenses, project activity awareness, and ease of ease.
- The most important features are dynamic watermarks, redaction, remote shred, two-factor authentication, time and IP access restrictions, bulk uploads, user-activity tracking, and full audit trails.
- To choose the best VDR, you should define your needs and budget, read the reviews, compare different options, and test a solution using a free trial.
Thank you for reading!