What Is a Secure Data Room?
A secure data room (VDR) is an online repository that is used to keep and share confidential documents. They are utilized in M&A transactions as well as collaborative projects. The major difference between a VDR and regular cloud storage, is that a VDR is designed to support due diligence and provides advanced security features like audit logs and two-factor authentication.
A data room used to be a physical space where confidential documents were kept for business transactions. They were utilized by investors, banks, and brokers to look over paperwork as part of the due diligence process during M&As as well as fundraising and audits. Today virtual data rooms are rapidly replacing physical rooms because they’re more cost efficient and provide a variety of security-related features that traditional data rooms lack.
For example, the right virtual data room can allow users to access and view documents from anywhere in the world. This allows buyers from all over the world to have access to documents that can be the difference in the success of an M&A deal. They can then compete for a deal that would otherwise be impossible even if they were competing against local investors. This also keeps the company from having to worry about documents being lost in transit or destroyed by fire or a storm, as they would be in a physical location.
Other than document storage and sharing, a virtual data room can also permit users to submit questions and suggestions to the owner of the document, which helps speed due diligence while offering greater transparency than email or chat. Furthermore, the best virtual data rooms will prevent actions like printing or copying a document’s contents and will also provide proof of tampering.