A secure data room (VDR) is an online repository that is used to store and share confidential documents. They are typically used in M&A deals as well as collaborative business projects. The major difference between VDR and regular cloud storage is that it’s designed to aid due diligence and offers advanced security features such as audit logs, two-factor authentication, and multi-level permissions.
Traditionally, a data space was a physical room that housed confidential documents needed to conduct business transactions. They were used by investors, brokers as well as banks to look over paperwork during due diligence processes for M&As and fundraising. Virtual data rooms are replacing physical data rooms because they are more affordable and have security features that traditional spaces don’t.
A well-designed virtual data room for instance, enables users to access and view documents from any location on the planet. This allows buyers from all over the world access to documents that could be the difference between a successful or unsuccessful M&A deal, which can help them to compete for a higher price, which would otherwise be impossible if they compete against only local investors. It also keeps the company from having to worry about documents being lost during transport or being destroyed by storms or fire, as they would be in physical space.
A virtual data room allows users to ask questions and provide comments to the document’s owner. This improves due diligence and gives better transparency than chat or email. Virtual data rooms are also created to stop actions like printing or copying a document’s content. They also have robust safeguards against tampering.