What Is a Virtual Data Room?


A virtual data room (VDR) is a cloud-based repository for documents and other files used to securely share sensitive information during complex business transactions, like mergers and acquisitions, due diligence processes, financial audits, fundraising rounds and legal proceedings. As opposed to traditional physical storage, VDRs provide greater control over access and security while cutting down on management costs.

When choosing a VDR provider, make sure you select one with a robust and complete set of features to satisfy the needs of your business. For instance, you may think about whether the platform is compliant with ISO 27081 standards for data security or features robust virus and malware scanning with an uptime of more than 99.9%, and multifactor authentication to guarantee that the data uploaded is secure. In addition, you should look for customized options, such as color-coding, for easy identification of specific documents during internal meetings and at-a-glance reports that give executives in the C-suite the comprehensive overview they require.

A VDR is used most often in M&A transactions, when potential buyers go through a lot of documents for the companies that are being sold. M&A virtual datarooms allow for an efficient due diligence process and reduce risk because they limit access to confidential information to those who need 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 boosts productivity and speeds decision-making. Furthermore, M&A VDRs enable you to keep complete and thorough audit trails, which are essential for M&A due diligence.

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