Virtual Data Rooms: What You Need To Know?
Today, any would-be solid strategy of company management should include digital solutions to at least ensure security and accurate planning. This mission can be fully accomplished with the help of such equipment as online data room software since it was initially elaborated to optimize business transactions.
The variety of virtual data room providers allows businesses to complete various tasks regardless of their size, industry, and governance system. Which features enable that and how you can use them in your definite situation? Find answers in our quick but substantial review of the soft.
The Definition of Dataroom Software
An online data room, also called virtual, is a multifunctional repository through which business parties can exchange documentation and make deals. The software comprises numerous instruments the use of which simplifies such operations as:
- Mergers and Acquisitions;
- Legal Due Diligence;
- Transactions with Intellectual Property;
- Investment transactions;
- Initial Public Offering;
- Strategic Partnership;
- Board meetings, and others.
Virtual datarooms, or VDRs, are ready-to-use online spaces where complex multistage business transactions can be conducted from the preparation stage up to the final deal. VDRs are more secure solutions than physical datarooms or other programs or applications used for sharing files or holding conferences online. The seamless work of the software is based on the following principles:
- improved security;
- the abundance of functional tools;
- high integration level;
- ease of use;
- comprehensive support.
Who Benefits from Virtual Datarooms
Although any modern company can benefit from the use of a virtual data room, for some of them, the software has become crucial. Here, it's not the size, it's the industry that plays an important role. Companies working in the following domains are usual clients of virtual data room providers:
- Life Science;
- Legal firms;
- Investment Banking;
- Private Equity firms;
- Venture Capital firms, etc.
Running such businesses requires reliable digital solutions capable of ensuring quick and effective online interaction with all the involved parties. Electronic data room software is an example of such a solution.
The Most Useful Features of Online Datarooms
Imagine you need to conduct a due diligence process. When utilizing a traditional data room in the office, you will have to fix the date when all the involved participants may be present or travel yourself and spend money and time on it. Another problem here is the security of your information. You can't be 100% sure it won't fall into the wrong hands when employing a physical data room.
Alternatively, you can prepare and run the whole procedure via a virtual data room. This variant does not only allow the parties to meet online from whatever place on whatever gadgets. It guarantees a secure documentation exchange due to its key features. Let's observe the most common of them.
Document Management Tools
An online data room is an ideal repository for your documents. You can organize them according to your current transactions. It's up to you to define the structure, the number of folders, and even their design. Some of the important options your VDR should definitely have will include:
- Drag&Drop Upload;
- All formats supported;
- Folder auto-indexing;
- In-text search.
Be aware that you can purchase a VDR with the exact storage capacity your business needs. The same can be said about the features – you can pick a vendor that offers all the necessary services for you.
Digital Rights Management
Having enough storage for your papers and keeping them in order is a great option, however, virtual datarooms can also protect the most sensitive of them with the help of the so-called digital rights management tools, namely:
- Redaction tools will allow you to eliminate all the sensitive information from your documents.
- View-only tools serve to prevent illegal copying, downloading, or printing of your papers.
- Watermarking is used to confirm your ownership of your files, be it a textual document, video, or whatever.
Transactions may involve different non-member participants. So, granting them partial or limited access to such info is often a sensible decision. In this respect, you can easily manage your documentation via a proper VDR.
In fact, most of the electronic data room instruments ensure security on a certain level. However, the product itself complies with the highest standards applied to equipment that deals with information transfers. A secure data room service will include:
- reliable servers (ISO 27081, SOC2, FINRA, HIPAA standards);
- data centers with uptime of 99.9%;
- advanced encryption methods, and more.
Thanks to all this, your company can rely upon the software and expect its documentation to be protected from either losses or hacking.
You can add as many users as you wish to your virtual data room. The most important thing here is that you can control the access process from start to finish. The minimum features you can use will be:
- Two-factor authentication;
- Customizable NDA (Non-Disclosure Agreement);
- Several levels of access rights;
- Audit Logs, etc.
As for the latter, this option allows you to track the activities done in your VDR. This will not only help you to ensure the security of your documentation but also supply you with extra info necessary for analyzing the progress of your transactions.
Q&A Option / Due Diligence Checklist
Using these specific features will help you to organize a smooth interaction between you and your auditors, investors, etc. They will be able to request definite documents and ask for extra information during the transaction.
Which VDR Vendor is the Best?
You and only you can answer this question. To purchase an online data room and never regret it, you should know your business well as well as have precise goals. You can only be sure that the software of your interest will suit you after you take the following steps:
- Define your objectives.
- Be sure to know your financial abilities.
- Identify the tools your transaction will require.
- Select several vendors and compare their reviews.
- Place the priority on security – the right choice for you is a secure data room service.
- Opt for a vendor that offers a free Trial.
- Try your VDR for free.
You will avoid disappointment and money waste if you learn more about virtual data room. When you manage to pick the right VDR, you will be able to optimize your business strategies and raise your company to a new level of development.