What Is a Virtual Data Room?

A virtual data room is a tool that provides secure, central storage for digital documents. This allows business users to share information with internal as well as external stakeholders. It also facilitates document version tracking and improved security.

Investment bankers use VDRs for due diligence during M&A transactions, which usually require large amounts of confidential documents that are reviewed by multiple parties. If a deal is to be concluded, they must be able to upload, review and download the confidential documents quickly. They also require an efficient storage space to store this sensitive data. A purpose-built VDR helps them to manage by providing a clear folder structure and robust controls for document access that can be immediately revoked if a deal does not take place.

VDRs are also used for audits and regulatory filings which require open communication between internal stakeholders as well as external regulators. These projects often require long collaborations between teams that span different locations and time zones. A VDR designed for collaboration and tracking activity as well as communication with all stakeholders is easy with a VDR.

When selecting a service look for features such as drag-and-drop or bulk upload of files as well as support for popular extensions for files. You should know the level of physical protection the company provides, such as offsite backups and redundancy. Check if they offer the ability to add dynamic watermarks to viewed and printed files, or limit access to certain IP addresses.

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