More and more companies are moving away from the traditional data room. While a physical data room still has certain use cases, physical data rooms as a whole aren’t industry standards. However, this poses a problem: Since mergers and acquisitions (M&A) regularly depend on confidential information exchanges, what online platforms can you use to share sensitive documents, confidential data, and financial statements?
Many businesses try to use platforms like Dropbox and Google Drive to share confidential documents. Other brands turn to virtual data rooms. During M&A due diligence, fundraising pushes, and other financial transactions, VDRs offer greater sharing functions for confidential documents, secure virtual data room protocols, and other deal room functions that enhance the M&A process. Here’s what you need to know.
What is a virtual data room?
In many ways, the concept of the virtual data room is self-explanatory. Compared to physical data rooms, virtual data rooms enable brands to conduct M&A transactions digitally. The right virtual data room helps you aim for a few due diligence process ideals, including how you share sensitive data or intellectual property. Virtual data room solutions also allow you to leverage data, analytics, and insights to learn more about each M & M&A and make more informed business decisions. However, not every virtual data room is created equally.
Before selecting a virtual data room solution or VDR provider, it’s important to compare security features, review access functions, and test Q&A tools when possible. A secure virtual data room should offer ease of use while still providing a digital workspace that law firms, investment bankers, buyers, sellers, and bidders can leverage to enhance due diligence and benefit each merger, acquisition, or other transaction.
VDRs let you set account access permissions.
The right virtual data room provider should offer a few key security features and tools. For instance, your chosen VDR should enable you to set granular access permissions to the VDR users within the firmroom or dealroom. This means that your administrator can assign specific roles to each new user that determine which folders, documents, and information pieces interested parties can access. This, alongside the right collaborative features, can streamline an M&A deal and allow you to use a secure platform to limit document activity.
On top of that, you can use your secure data room document activity history to learn more about your M&A deals. For example, you can see how frequently users, project managers, investment banks, and other participants interact with confidential files and sensitive information. You can also spot lulls in your business processes or document activity that queues you into a stale deal that needs extra attention.
VDRs are flexible tools.
When you choose a VDR service provider that offers full control and robust security functions, it’s easier to commit to the platform. Some VDRs even offer digital rights management integration, two-factor authentication protocols, and dynamic watermarks. In addition, the right partnership and collaboration platform can keep secure file information out of the wrong hands, empower brokers, and act as a complete due diligence solution. Beyond that, online data rooms enable deal flexibility that allows you to make decisions in response to user activity.
VDRs are flexible enough to apply to several use cases and scale alongside different deals and financial transactions. The right virtual deal room employs robust encryption and document security to empower each M&A. Plus, with clear audit trails, it’s easier to store and refer to historical data. So whether you’re partnering with investment banks to review a major real estate deal or you’re looking for a secure platform that offers watermark tools and audit logs, the right VDR can empower the transaction process.