Is Your VDR Worth The Price?

A virtual data room (VDR) is software-as-a-service (SaaS) that enables businesses to exchange private data online while maintaining complete control and exclusive ownership. VDRs are crucial in enabling external-facing processes in a variety of industries, such as finance (IPOs and mergers and acquisitions are two frequent use cases), law, and scientific research.

Where to Use Virtual Data Rooms

Data Storage

Initially, data rooms were created as online data warehouses, allowing businesses to store their documents in one place. It is important to note that an electronic data room is a centralized data storage location where you can store any type of data in any recognizable data format.

The term “centralized” means that all your business data will be available on one platform; you don’t need separate databases for different partitions. Your employees or business groups can access the necessary documents from your VDR.

In addition, VDR software makes data exchange convenient and fast. A data room user can share files with one or more users, edit or annotate documents (depending on permission settings), create live links to documents, and allow multiple users to work on the same document. In addition, the owner of the file or the administration of the RDR has the right to revoke access to the document at any time.

Online Communication

Did you know that VDRs are one of the most secure communication channels? In the past, email was considered the most secure communication channel, but hundreds of email scams have cast doubt on the credibility of service providers.

Online data room software ensures that you, your employees, or business groups can communicate without any worries. In addition to storing and sharing documents, data room users can communicate via multiple routes.

For example, VDRs facilitate one-to-one communication through instant messaging services. Users can create groups/chat rooms, create polls, hold online meetings, and even vote online. Many VDR providers allow third-party integration (if you don’t want to use built-in connectivity).

Audio/video conferencing tools are very effective for remote team meetings, meetings with investors or stakeholders, and online board meetings. Many VDRs have HD audio and video conferencing tools.

Due Diligence

VDRs are the unsung heroes when it comes to due diligence in initial public offerings (IPOs), fundraising, M&A, and sale/purchase of commercial real estate assets. Due diligence is the most important step in this type of business transaction and is the stage where delaying data access can lead to failure.

Due diligence is a complex process in which acquiring companies or investors review and analyze the target company’s business data. Target companies are often hesitant to share their confidential documents, including trade secrets, product designs, marketing plans, etc. This creates a situation of uncertainty on both sides.

Online data rooms help targeted companies share their sensitive data with complete control. Target companies can add multiple buyers to the VDR, upload all required documents in an orderly fashion, and grant an individual access to different buyers according to their needs.

Similarly, buyers and target companies can communicate in VDRs. Buyers can ask questions in live Q&A sessions and receive immediate answers. They can add notes to documents and ask for clarifications. Both parties can also arrange audio or video meetings and sign agreements under the VDR.

Business Deals

Businesses can use electronic data room software to complete business transactions online. For example, real estate firms use VDRs to sell/buy commercial real estate assets. Realtors can add investors and sellers to data rooms and let them chat freely. At the same time, realtors can collect and check all the necessary documents, prepare contracts/agreements and even arrange video tours of the objects of interest.

Similarly, fundraisers can attract investors by publishing business data through VDRs. Data room administrators can control the flow of data and prevent data leakage with VDR security features.

Secure Presentation of Data

VDRs are very common in pharmaceutical and R&D companies for presenting data to investors. For example, if a pharmaceutical company wants to attract investors for a new prototype or formula, it must provide them with all sensitive data.

These scenarios increase the likelihood of data theft, and the pharmaceutical company could lose its competitive advantage. Luckily, online data room software can help you present your data in the most secure way. For example, non-disclosure agreements, revocation of access to documents, “protective view” mode, etc., prevent unauthorized copying of documents.