What Is a Virtual Data Room?

document management software for freelance

A virtual dataroom (VDR) can be an online repository that can store documents and other files. It can be used to share sensitive business information like during mergers and acquisitions. Due diligence processes including fundraising rounds, due diligence and financial audits are also common. Compared to traditional physical storage, VDRs provide greater control over access and security, while decreasing management costs.

When choosing the best VDR provider, make sure you select one that offers a robust and comprehensive set of features to accommodate the requirements of your business. Take a look at, for instance, whether the software is in line with ISO 27081 standards, has strong virus and spyware scanning, and offers the benefit of a 99.9 percent uptime. Multifactor authentication can be used to ensure that the data uploaded is safe. Consider features that allow customization like color-coding to help identify documents during internal meetings, and at-a glance reports that provide executives in the C-suite with the comprehensive overview needed.

A VDR is used most often during M&A transactions, when potential buyers review extensive documents for the companies that are being sold. M&A virtual data rooms facilitate the most efficient due diligence process and reduce the risk of a breach by restricting access to confidential information to only those people who need access. In the course of an M&A deal users can benefit from the VDR’s FAQ section and comments. This increases efficiency and speeds decision-making. Furthermore, M&A VDRs enable you to have complete and comprehensive audit trails, which are essential for M&A due diligence.

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