What is a Virtual Data Room?

A virtual dataroom (VDR) can be an online, secure platform used for due diligence or confidential transactions. VDRs are specifically designed platforms to handle large volumes of sensitive documents. They provide enhanced security and compliance as well as sophisticated capabilities for organizing documents. They differ from standard storage options for files such as Dropbox, Google Drive, and Box because they provide specific features that simplify and speed up document sharing projects.

These features include granular permissions for access watermarking in real-time vectors and labels for classification that identify the files. They also track activity to the level of a page to determine who has viewed what and for how long. They provide detailed audit trails which are essential for meeting the compliance requirements and providing proof of due diligence. They also provide advanced capabilities such as redaction, which erases areas of files to keep personal information private, and fence view, which prevents taking screenshots.

VDRs are hosted online, so users from around the world can access them. This global access can increase competition among potential purchasers and help a company to be acquired get a higher price than it would in a local marketplace where investors are limited to a certain region.

VDRs can be used to gather and collaborate on information for investment fund rounds, M&A plans, legal cases, and more. They are more affordable than physical rooms, since companies only have to pay for an encrypted computer system and the costs associated with hosting the data online. They also reduce travel expenses as buyers are able to look over documents in the comfort of their workplaces, rather than having to travel to a seller’s office.


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