The Virtual Data Room (VDR) is a secure online repository for data and documents relating to transactions, legal transactions or court proceedings. VDR uses a central server and an extranet connection, an Internet connection with highly controlled access. This internet connection uses secure access provided by the relevant oversight provider or authority responsible for disabling or enabling secure access at any time.
VDR as a Virtual Space for Transactions
Initially, VDRs were only used by lawyers to meet with clients. Today, they are also used by many business professionals, lawyers, and accountants as a cheap and efficient way to review documents without the need for physical copies or even a physical meeting room.
The VDR contains highly confidential data and documents with restrictions and controlled access for viewing, copying or printing. The set time is intended for logging in and viewing documents and data. The VDR enables supervisory authorities and investors to access documents in a timely manner within the permitted period. With the current speed and efficiency of document searches, VDR can pay for an M&A (merger and acquisition) transaction.
Comparing the physical data room is time-consuming to administer, expensive to maintain, time-consuming on paper, and involves travel expenses for all users. VDRs easily allow multiple participants controlled access and actually result in 20-30 percent higher bid values than physical data rooms. Along with increasing the speed and efficiency of transactions, more secure information leads to more transactions at higher prices. However, in a real VDR, the data may not load, but can be viewed with the appropriate permissions.
Functions That VDRs Offer
Providing a secure environment for organizing, managing and sharing information is the essence of VDRs. In order to achieve this, however, each VDR should have a number of specific functions.
Data Room Features
The information stored in VDRs is not only sensitive but also confidential, which is why security has top priority. To ensure security, check the following:
- multi-factor authentication to minimize the possibility of account hacking;
- solid encryption methods to prevent data transfer to and from the data room;
- digitally watermark each downloaded document to prevent information leakage;
- restricted access to restrict document sharing, printing or editing;
- data backups to ensure no documents are lost or destroyed;
- self-destruction of documents allowing immediate withdrawal of access to data;
Data rooms should provide features that ensure users have a seamless experience. This includes:
- ability to request additional documents, notes and due diligence;
- document management (editing, changing, adding notes and comments);
- track the activities of each user in the room.
Easy-to-use data rooms come in handy for both beginners and professionals:
- the intuitive user interface shortens the learning curve when working with the software
- the drag-and-drop feature makes importing files from your devices effortless
- bulk uploads save time importing and exporting files
- scrolling viewers allow viewing multiple documents while keeping one open
Accessible and responsive customer support is a guarantee that you won’t be left alone with any problems, even if it’s the middle of the night on a Saturday. So look for:
- 24/7 support, which is crucial if your business is in a different time zone;
- availability by phone, email and sms;
- multi-language support for international companies and organizations;
- each vdr provider offers a variety of functions and features that make it even more difficult to choose the right provider.
How to Choose a Suitable VDR?
Follow these recommendations to shortlist the data room providers that fit your needs.
- Research the providers. Select several providers and research them. Start with their website, read articles about them and talk to customer support.
- Decide on features. Each provider offers a slightly different set of features. Determine the ones that matter to you (like 24/7 support, enhanced security, or customization) and select the vendors that offer them.
- Read the reviews. The best way to get to know a VDR provider is to find out what other users are saying about it. The vendor may claim to have M&A and IPO experience, but it’s better to see an honest review that mentions this as proof.
- Opt for a free trial. We do not recommend investing money in data room services before trying them out. Almost every provider offers 1-3 months free trials, so use this time to try out its features.
- It’s never easy to compare VDRs, especially since many of them are so similar, but you can do it with the right formula.