Virtual Data Room Blog

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A virtual data room is an online, secure repository that allows business users to share, upload and track sensitive documents with third parties outside the firewall of their company. The data is then accessible whenever needed via the internet or a specific application. Virtual data rooms are becoming vital for many business processes and financial transactions. This article explains why that is so and gives advice on how to choose an appropriate provider.

It’s crucial to know the requirements for your business before deciding on a virtual space. If you’re planning to conduct an M&A deal, it is important that the platform support due diligence and collaboration between both the sell-side and buy-side. This implies that the platform needs to be able to customize permission profiles and detailed activity monitoring to ensure that only the right people are able access your confidential data.

VDRs are also used to provide market research and investment memos with private equity and venture firms during a round of financing. This can speed up the acquisition process and ensure that investors are seeing exact information about the company. Lastly, many VDR providers permit businesses to establish a public website to share documents with potential clients and partners. This is particularly beneficial in M&A scenarios in which it is important to build trust with potential investors.

When comparing different VDRs it’s also worth weighing the price of a subscription as opposed to a one-time transaction. Many vendors offer a subscription with unlimited usage that permits users to start, pause and provide multiple data rooms at any time.