A virtual dataroom (VDR) provides a secure platform for storing critical documents during an M&A deal. The documents could include employee information, contracts and financial statements. This can speed up the due diligence process for the buyer, while also helping to secure the confidentiality of the selling company’s data.
Due diligence is the study done by a prospective buyer or investor to analyze an target company and its assets prior to entering into the process of negotiating. Technology has altered this process drastically over the years, especially in relation to sharing confidential information. Rather than having a physical room full of filing cabinets that can be closed and opened by a variety of individuals online, on the internet, VDRs are the new way for companies to share files with investors and other stakeholders.
Many online VDRs adhere to strict security protocols. They have many complex layers that work in combination to create a barrier against threats. Physical security includes regular backups, data siloing in private cloud servers, multiple-factor authentication and redemption for accidents. Security for applications includes encryption methods, digital waterstamping, audit trails, and permissions to allow for customizing folder structure.
Another important feature that differentiates a VDR from the competition is its ability to integrate into existing systems and business processes. This allows users to utilize their preferred software and tools to accomplish the task at hand to reduce errors and speed up the process of M&A transactions. Additionally, some VDR providers offer more effective plans that are determined by the amount uploaded to the platform, number of users, storage size and the duration of the project, which can help companies avoid unexpected costs and overages.