A virtual dataroom (VDR) provides the security of a platform to store crucial documents during an M&A deal. These documents could include contracts and intellectual property information employees’ information, financial statements, capitalization tables and many other documents. This can speed up the due diligence process for buyers, while also helping to protect the confidentiality of the selling company’s details.
Due diligence is the research that is conducted by a buyer, or potential investor to analyze the company they are considering and its assets prior to entering into the business of. Technology has altered this process dramatically over the years, especially in relation to sharing private information. Rather than having a physical room Virtual Data Rooms filled with filing cabinets that can be closed and opened by a variety of individuals, online VDRs are the new way for companies to share files with investors and other stakeholders.
Many online VDRs adhere to strict security standards with a variety intricate layers that work together to create a total barrier against potential threats and breaches. This includes physical security – including continuous backup and data siloing on private cloud servers multi-factor authentication, as well as accident redemption – and applications security that includes encryption techniques such as digital watermarking, audit trails of all activity within the data room and the ability to grant permissions in granular ways that allow for custom folder structure.
The ability of a VDR to connect with existing processes and systems is another key feature that sets it apart from the other. This lets users use their preferred software and tools for the task at hand which reduces errors and streamlines the process of M&A transactions. Additionally, some VDR providers offer more cost efficient plans determined by the amount uploaded to the platform, the number of users, size and the duration of the project, which can help companies avoid unexpected costs and overages.
