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A virtual data room (VDR) is an online data repository that businesses can use to share critical documents with external parties in a highly secure online environment. VDRs are typically used during financial transactions and serve as virtual “meeting” rooms where buyers, attorneys, accountants, and other professionals can safely review confidential documents. A virtual data room allows businesses to meticulously collect, organize, share, and monitor important business files during transactions.
With the omnipresence of computers, practically all companies now rely on software and technology tools to run smooth and efficient businesses. Virtual data rooms are ideal for companies embracing a ‘paperless’ approach to storing, sharing, and tracking their business-critical information.
Companies commonly use virtual data rooms during deals, such as mergers & acquisitions and fundraisings, to securely share highly-sensitive business-critical documents with multiple parties in and outside the organization. Information stored in VDRs is often highly-sensitive and of high importance to the owners of companies; therefore, safeguarding this information is also of the highest importance.
In addition to storing financial records required for financial, tax, and legal purposes, companies also use virtual data rooms to store documents that could be considered intellectual property, such as copyrighted information or trade secrets. With the constant and daunting presence of modern-day cybersecurity threats, virtual data rooms serve as the ideal solution for companies looking to ensure the absolute safety of their business-critical data.
The usage of virtual data rooms has now become the norm for modern-day financial transactions. Advances in online security over the past decade have vastly accelerated the redundancy of physical data rooms, proving to be both unproductive and problematic for parties involved in deals. Virtual data rooms provide companies with a highly-efficient and convenient platform to securely execute the sharing and tracking of their business-sensitive information from anywhere across the world at any time. The most prevalent uses of virtual data rooms are for the following types of deals:
One of the most frequent uses of VDRs is for due diligence during an M&A transaction. Mergers are usually preceded by a considerable amount of research which typically involves sifting through inexhaustible volumes of information. Companies interested in receiving purchase offers find themselves in the unsettling position of having to divulge business-sensitive data to multiple third parties. Virtual data rooms provide these companies with the security and tools they need to manage, safely share, and track their documents with minimal hassle.
Companies are often confronted with scenarios where external parties must review the company’s business-sensitive data, not necessarily from an adversarial standpoint. For instance, multiple situations arise where companies need to share information with their lawyers, accountants, compliance auditors, and trusted advisors. VDRs provide companies with the means to share and track their business-critical information with these professionals in a highly-secure online environment.
IPOs can often be strenuous transactions for companies interested in going public. Companies who decide to go public are expected to maintain a considerable degree of transparency with the public and shareholders and are subjected to additional local, state, and federal rules and regulations. For companies looking to execute an IPO successfully, this calls for extra care and caution regarding ensuring the scrupulous management of the company’s documentation. Virtual data rooms satisfy this need by allowing companies to streamline sharing of business-sensitive data with the public and shareholders.
Fundraising is a crucial event that often dictates companies’ growth and possible survival. For companies involved in fundraising activities, ensuring the smooth and secure circulation of business-critical data between the company and its possible investors is paramount. Virtual data rooms have been relied on extensively for Private Placement Memorandum (PPM), Private Invest in a Public Entity (PIPE) distribution, and other Fundraising efforts. VDRs provide leadership teams in companies with the ideal platform to effectively control and oversee the exchange of sensitive information with investors.
Companies and organizations involved in strategic partnerships must establish and maintain a secure data distribution and exchange pipeline to ensure smooth proceedings. Virtual data rooms can relieve companies of any uncertainty around the safety and protection of the valuable information they have shared with other organizations. VDRs provide companies in strategic partnerships with a highly-efficient and secure platform that both parties can use to share securely and store data.
The need for modern-day companies to safeguard their Intellectual Property is becoming increasingly prevalent. Companies possessing highly sensitive intellectual property critical for the business’s survival are compelled to take extraordinary measures to ensure the security of this data. A virtual data room (VDR) is an effective means for companies that recognize the importance of storing their intellectual property in a secure online environment designed to shield sensitive data from security threats.
In certain scenarios, board members of companies are heavily involved with the company’s leadership team and insist on maintaining a keen eye on how the business is performing. These board members can often be scattered across the globe yet still require access to the company’s sensitive data. In such cases, virtual data rooms (VDRs) provide companies and board members with a platform that allows them to accomplish the goals they are looking for – the secure sharing of their business-critical files worldwide.
The strength of a virtual data room lies, without doubt, in its security. Virtual data rooms offer unparalleled security features designed to shield business-critical documents and prevent leaking a company’s sensitive information into unwelcome hands.
VDRs are ideal and hassle-free solutions for securely sharing and tracking business-critical information with multiple parties during transactions. A virtual data room allows you to:
Investment bankers and business brokers use virtual data rooms for due diligence and marketing efforts to manage their business clients’ sales or fundraising efforts effectively.
A VDR is an excellent place for investment bankers and business brokers to showcase a company’s executive summary and overview information while courting interested parties. The tracking features of a virtual data room allow bankers and brokers to track user access to documents in the audit trails, providing them with excellent marketing intelligence to act on.
Attorneys and their teams rely on VDRs for multiple purposes. Among these include:
VDRs assist CPAs and accounting firms with the collection (PBC List Management), organization, and management of client documents related to tax preparation and audit.
Local and Regional banks and mortgage brokers rely on VDRS to manage the collection, storage, and sharing of documentation related to loan application and processing.
Funds, Private Equity firms, and Venture Capital firms use virtual data rooms to create highly-secure pipelines of information with partners, portfolio companies, auditors, and other third parties.
VDRs allow small business owners and corporate project teams to easily store and share highly sensitive business-critical information beyond the firewall. A virtual data room can provide an excellent audit trail of who has had access to specific information and also affords the ability to provide time limits for document access.
Biotech and pharmaceutical companies must use HIPAA-compliant vendors and FDA-approved (business associates) when storing and sharing certain types of information. A HIPAA-compliant VDR becomes a necessity in these situations.
Additionally, for biotech and pharmaceutical companies storing and exchanging clinical trial data, a virtual CFR 21 Part 11 validated virtual data room is necessary.
Technology companies depend on virtual data rooms to protect intellectual property and securely store and share information with their partners, attorneys, accountants, and auditors.
In addition to their due diligence and fundraising requirements, energy and mining companies use virtual data rooms (VDRs) to facilitate document collection and management during environmental audits and bid management.
Choosing the right virtual data room (VDR) provider for your organization, there are seven key things you need to look into:
You need to assess three security areas to effectively compare the differences in security between virtual data room (VDR) providers: data security, feature security, and physical security.
Data Security: A good VDR provider will exceed standard security compliances and provide you with advanced security measures such as virus and intrusion protection, data encryption (at rest and in transit), and network firewalls.
Feature Security: Arguably the most important aspect of security, feature security addresses general user access to the system and the fact that most data breaches occur as a product of human error. A good data room provider offers features that protect against user errors and streamline workflows. This includes flexible security features such as password complexity, change and expiration requirements, inactivity timeouts, multiple user types, and access control restrictions.
Physical Security: A good virtual data room provider utilizes industry-grade data centers with adequate physical security measures like offsite data backups, data redundancy, fire protection, and biometric access. A good provider also has a solid business continuity plan and regular penetration testing.
You must pay attention to document access controls to choose a VDR provider that meets your needs. Make sure to ask the following questions:
Good virtual data room (VDR) providers know that controlling document access is just half the puzzle; you also need tools to track user activity. Make sure to choose a provider that allows you to:
Good virtual data room (VDR) providers ensure their clients have the exact features to facilitate seamless transactions. Here’s a caveat: don’t overcomplicate the process by buying all the features that a provider offers. This may compromise your user experience and encumber you with features and options you and your users will never use.
A common characteristic among good VDR providers is that they continually upgrade their services with the latest technology and security features. Good VDR providers also keenly listen to their customers and gain insights for future development from their feedback.
Good VDR providers offer transparent pricing models that meet your needs. Companies using virtual data rooms often have unique needs regarding storage space, the number of administrators and users, and specific customer support requirements.
Choose a virtual data room provider with a proven track record in facilitating transactions within your industry. This is not just about having confidence in your chosen provider but also about ensuring efficacy. Seasoned virtual data room providers who have already supported clients in your industry will be better equipped to provide you with the features, services, and support you seek.
And last but certainly not least, a good virtual data room (VDR) provider has a customer support team dedicated to providing clients with the rapid support they need and expect!
For more than 20 years, Vault Rooms has been an industry-leading cloud-based virtual data room provider, proudly facilitating tens of thousands of global M&A transactions across a wide range of industries. Business brokers, investment bankers, accountants, attorneys, private equity firms, and banks can safely collect, organize, share, and track business-critical documents on the Vault Rooms platform 24/7/365.
Gartner research has stated that most professionals spend as much as 50% of their time searching for and gathering required documents. For someone earning $100K/year, that translates to a loss of as much as $50K/year.
Simplify your client engagements with streamlined document collection and organization. Focus on delivering value rather than struggling to gather the documents you need.
Collect, Organize and Review documents on auto pilot!
Gartner research has stated that most professionals spend as much as 50% of their time searching for and gathering required documents. For someone earning $100K/year, that translates to a loss of as much as $50K/year.
Simplify your client engagements with streamlined document collection and organization. Focus on delivering value rather than struggling to gather the documents you need.
Collect, Organize and Review documents on auto pilot!
We are available to answer your sales or support questions.
Corporate Office
Apex, NC
Mailing & Accounting
3096 S. Horner Blvd.
Suite 280
Sanford, NC 27332
Sales & Support:
+1 (800) 988-8850
International:
+1 (817) 864-1363
Corporate Office
Apex, NC
Mailing & Accounting
3096 S. Horner Blvd.
Suite 280
Sanford, NC 27332
Sales & Support:
+1 (800) 988-8850
International:
+1 (817) 864-1363
Sales & Support: +1 (800) 988-8850
International: +1 (817) 864-1363
