What Is a Virtual Data Room?

A virtual dataroom (VDR) is a cloud-based repository for documents and other files. It is used to securely share sensitive business information for example, during mergers or acquisitions. Due diligence processes such as fundraising rounds, due diligence processes and financial audits are also frequent. In comparison to traditional physical storage, VDRs provide greater control over access and security, while reducing management costs.

When selecting a VDR provider, make sure that you choose a provider that is robust and has a extensive set of features to support the needs of your business. For example, you may think about whether the platform is compliant with ISO 27081 standards for Data Insights data protection or offers an effective virus and malware scanner and uptime that exceeds 99.9 percent and multifactor authentication to ensure that your data is protected. Look for features that can be customized such as color-coding features to assist in identifying documents during internal meetings, and at-a glance reporting that provides C-suite executives with the high-level overview they require.

A VDR is used most often in M&A transactions, when potential buyers go through a lot of documents of the companies that are being sold. M&A virtual data rooms permit more efficient due diligence process, and also reduce the risk of a breach by restricting access to sensitive information to the individuals who are required to see it. During an M&A transaction the users also benefit from the ability to work effectively by using a VDR’s Q&A and comments sections. This improves productivity and speeds the process of making decisions. Moreover, M&A VDRs enable you to keep complete and thorough audit trails, which are a must for M&A due diligence.

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