Virtual data room is a product of combining elements of a web content management system and document management system.
It is the storage (archive) of certain confidential corporate documents in electronic form and with a clear structure. It usually exists in the form of a website. A distinctive feature of VDR is the principle of fireproof safety: a higher level of protection of access-transfer of data to external users and their physical safety. Compare virtual data rooms before choosing with which VDR provider to work.
What VDR Is
A virtual data room (VDR) is a secure online repository for data and documents related to business, legal transactions, or litigation. The VDR uses a connection to a central server and extranet, which is an Internet connection with very controlled access. This Internet connection uses a secure login provided by the appropriate supervisory vendor or authority responsible for disabling or enabling secure login at any time.
This term is also known as a virtual deal room. Originally, VDRs were only used by lawyers to meet with clients. Today, a wide range of businessmen, attorneys and accountants also use them as cost-effective and efficient virtual data room solutions for reviewing documents without the need for physical copies or even a real meeting room.
VDR is used as a tool:
- Due diligence of corporate transactions (mergers and acquisitions, bankruptcy and dissolution, loan syndication, sale of real estate, etc.).
- Audit and compliance (compliance control).
- Confidential business communications, when it is necessary to provide access to a single source of information to several users from any geographic location.
- Access to viewing (downloading) documents can take place only after proper authorization.
The virtual data rooms contain strictly confidential data and documents with restricted and controlled access when viewed, copied or printed. A set time is scheduled for logging in and viewing documents and data. VDR allows timely access to regulatory and investor documents. At the current speed and efficiency of document retrieval, VDR can pay for itself in one M&A transaction. Physical data rooms, by comparison, are time-consuming to administer, expensive to maintain, require a lot of paper, and incur transportation costs for all users.
An electronic data room easily allows multiple bidders to have controlled access and actually results in 20 to 30 per cent higher bid values than physical data rooms. Along with increased transaction speed and efficiency, more secure information leads to more trades at higher prices. In a real VDR, however, data cannot be downloaded but can be viewed with appropriate permissions.
The Benefits of VDRs: How to Manage Data with Ease
When it comes to promoting a company’s interests and data management, data room services are efficient, cost-effective and strategic ways for sellers and buyers to not only cross the finish line but to win.
- Information that is well organized and can be shared quickly. Your consumers and anyone else who will use the files will undoubtedly love the ease with which they can simply view or review the file without any problems. Future customers will be more inclined to invest and bid favorably on your projects because the data looks more presentable.
- Faster completion of deals. Having your own virtual data room and working with the best data room providers makes it much easier to close deals, making it faster and smoother. Unlike physical data rooms, you, your clients and investors won’t have to visit the site at a certain time. It allows access at any time and from any location.
- All-day remote access saves space. Another recommendation for businesses from startups using VDR is the ability to access data at any time. You get the freedom from having to access data at certain times of the day. Physical storage rooms are inconvenient in today’s fast-paced environment because they can only be accessed when they are open and only on-site.
- Document Protection. With online data room software, you don’t have to worry about paperwork issues. All of your office papers, documents, study guides and contracts can be digitized and stored in VDRs. They won’t fade with age and can be read on a laptop, desktop computer or any other compatible smartphone or electronic device.
However, data room comparison helps you to compare and choose the best data room for you and for your organization.
Why Use VDR?
What is a virtual data room used for? There are dozens of situations where a confidential document can be lost or intentionally compromised, but the ways to counter this are few. VDRs are used for permanent or temporary cloud storage. According to many studies, this approach to working with documents actually already increases the efficiency of the organization. A data room software is a space where documents are sorted into folders, all participants have a certain level of access rights, they can download files, upload them, and share them. This format of space allows organizing convenient collaboration within different business processes.
A virtual data room is an effective tool for storing and sharing documents with internal and external agents. Creation of folders, delimitation of access rights and other functional features of virtual data room providers allow organizing comfortable collaborative workflow. However, both the cloud storage itself and the files contained in it need protection, which can only be ensured comprehensively: by using a secure VDR space together with invisible document labeling. Implementation of such a solution in a company will enable you to create a preventive effect and identify the source in case of information leakage.