What Is a Virtual Data Room?

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

When selecting a VDR provider, make sure to choose one that offers a robust and extensive set of features to support the needs of your business. Take a look at, for instance, whether the platform is in compliance with ISO 27081 standards, has strong virus and spyware scanning, and offers an 99.9 percent uptime. Multifactor authentication can also be used to ensure the data uploaded is secure. Consider features that allow customization, such as color-coding to assist in identifying documents during internal meetings, as well as at-a glance reports that provide C-suite executives with the high-level overview required.

The most common use of the VDR is during M&A deals, where potential buyers review the extensive documentation of the businesses being sold. M&A virtual data rooms allow for an efficient due diligence process and lower risks by restricting access of sensitive information to the parties required to view it. In an M&A transaction users also benefit from the ability to work effectively through a VDR’s question and answer and comments sections. This read at dataroomsystems.com boosts productivity and speeds decision-making. Additionally, M&A VDRs enable you to have full and complete audit trails, which are a must for M&A due diligence.