What is a Virtual Data Room?
A virtual dataroom (VDR) is an online repository that provides secure document storage and collaboration among multiple parties. It can be used as a tool in business transactions that require secure storage and management of documents, such as M&As, fundraising and due diligence.
VDRs have a wide range of features that separate them from file-sharing services that are basic and physical data rooms. Certain established VDR partners, for instance provide security certifications such as ISO 27001, SOC 1/2/3, watermarking, customizable NDAs, and at-a-glance reporting.
A VDR’s content can be tailored to specific audiences. For instance life science startups could contain documents targeted at potential investors that provide information about their accomplishments (e.g. clinical trial results and HIPAA compliance) while maintaining the highest levels of data security (e.g. intellectual property and licensing agreements).
For real estate transactions, VDRs can help disclose a wide variety of documentation including land titles, investment records, and management documents. They can be used to give a complete, transparent picture of the company’s previous and future plans – a powerful instrument for closing deals. Making the right use of a VDR can help reduce the amount of paper work and increase the efficiency of the M&A process. For example, it is a good idea to create a diagram of the VDR structure before starting work. This ensures a logical arrangement of documents and folders and allows for easy navigation.
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