A secure data room (VDR) is an online repository that is used to keep and share confidential documents. They are often used in M&A transactions as well as collaborative projects. The main difference between VDR, and regular cloud storage, is that the VDR is designed to support due diligence and provides advanced security options such as audit logs and two-factor authentication.
Traditionally, a data space was a physical space that housed confidential documents needed to conduct business transactions. They were used by investors, banks and brokers to examine documents as part of the due diligence process during M&As as well as fundraising and audits. Virtual data rooms are replacing physical data rooms since they are more affordable and offer a variety of security features that traditional data rooms do not.
For instance, a virtual data room can allow users to access and review documents from anywhere in the world. This gives buyers from all over the world access to documents that can be the difference between a successful or unsuccessful M&A deal, which lets to ensure that they can compete for a greater cost that is otherwise impossible when competing with only local investors. It also stops the company from having to worry about their documents being lost during transport, or destroyed by fire or a storm, like they would in the physical location.
Apart from document storage and sharing A virtual data room can also allow for users to submit questions and comments to the owner of the document. This improves due diligence while offering greater transparency than chat or email. Virtual data rooms are also designed to prevent actions such as printing or copying a document’s content. They also have robust tamper-evidence protection.