Virtual data room are getting increasingly common in the world of business and finance, but what are they exactly? If you’re not familiar with them, it’s easy to be confused by the name.
Simply put, a virtual data room is an online space for sharing documents. It’s a secure cloud-based file storage system that organizes and manages documents for a specific business transaction. It’s only accessible to certain authorized parties, who can contribute files and make comments from anywhere in the world.
Many virtual data rooms are used for M&As (mergers & acquisitions), but they can also be used for initial public offerings (IPOs) and real estate transactions. If you’re still using an on-premises solution, the benefits of switching may seem obvious, but it can be hard to know what features to look for in a virtual data room.
Here are six critical features that every reputable VDR should have
Table of Contents
1. Security
Data security is a top priority for every business, but it’s especially critical for businesses seeking to buy or sell. The information that’s exchanged during the due diligence phase of a merger or acquisition can be sensitive and must be protected from prying eyes.
A virtual data room (VDR) is an ideal solution for businesses that need to securely share confidential data with multiple parties. It provides the features necessary to ensure that those who access your data have been properly vetted and authorized to do so, while keeping other parties out.
2. Communication
The ability to communicate directly with potential investors via a centralized messaging system can simplify and speed up the transaction process. A virtual data room provider should offer this feature so that you can respond quickly to questions without having to contact external parties such as lawyers or accountants.
3. Collaboration
One of the main selling points of a virtual data room is its ability to facilitate collaboration between people inside and outside of an organization. VDRs allow for multiple external users to access the same documents simultaneously.
They make it possible for teams in different parts of the world to work together seamlessly by providing them with instant access to vital information.
4. File Sharing
It may seem obvious, but file sharing is at the heart of any virtual data room. Users can upload documents, which are then securely stored on encrypted servers and backed up daily. A good VDR will not only securely store your files, but also make them available for use by other participants in the transaction.
5. Customization
When you’re using a VDR for one of the most important processes your company has ever been involved in, you want to know that your service provider will make it as painless as possible. The best way to ensure that is to choose a VDR that can be customized with the branding and features that matter most to you.
6. Workspaces
With shared workspaces, users can share documents, chat and collaborate on tasks with others who are also in the virtual data room. This makes it easy to work together and get things done.
The Final Word
A virtual data room (VDR) is a collaboration tool that supports secure document sharing and management. It’s often used to support fundraising, business sales, and mergers and acquisitions, but VDRs can also be used in other situations where confidential information needs to be securely shared among multiple parties.
While most VDRs have the same fundamental features of file storage, security, and user management, there are some key differentiators to look for when shopping around for a solution.
