The Virtual Data Room was initially designed as a space for complex transactions such as mergers and acquisitions and due diligence. After the arrival of the digitalization trend, these solutions quickly became indispensable for these and a host of other transactions, as VDRs offer advantageous and modern features for data protection and management. Data rooms help reduce costs and speed up the transaction process, and this article will look at how VDRs can be helpful in due diligence.
What is a virtual data room for due diligence
Due diligence is one of the steps in closing an M&A deal that has always been too time-consuming and time-consuming. During this process, the party of potential partners must review all the necessary documents of your company to decide if the deal can be successful. The documents that experts work with are strictly confidential, so it remains in your best interest to ensure that this data is fully protected, and a virtual data room can help with that.
VDRs are an ideal option for due diligence, as they are a secure online space that allows complete control over the actions of other users. In addition, they are accessible from anywhere in the world so that due diligence can take place remotely. The Data Room feature set lets you speed up this process and make it simpler, more convenient, and safer. Below we highlight the main features that the VDR space offers to its customers and consider their benefits in the due diligence process.
Security
The chance of a data breach during due diligence is much higher than ever before because that’s when you allow third parties to work with your documents. However, VDR takes all doubts away, as it provides multiple layers of military-grade protection, among which:
- International-level security certifications – VDRs are licensed solutions that are exactly right to store sensitive data
- Double-factor authentication – allows protecting login from unauthorized access
- Customizable watermarks on documents – protects against leakage
- Data encryption -encrypts documents during storage and transmission to protect against unauthorized users
- Capability to restrict collaboration functions – copying, printing, forwarding, and uploading
- Communicate privately – encrypted chats or Q&A sessions. All conversations remain invisible to others
In addition, VDR is also aimed at reducing costs and avoiding system failures, so they offer:
- Lack of plug-ins for easy use
- Optimization for mobile devices
- Automatic virus scanning
- Multilingual interface
Document & User Management
For successful due diligence, your document system must be created as well as possible, but it’s not easy to handle such a large volume of documents manually. That’s why VDR offers:
- Automatic document uploading
- Automatic file conversion
- Automatic indexing
- Tags for categorization
- Smart search
- Automatic notifications about updates and changes in the document
Thus, it becomes much easier and more efficient to systematize documents, and it will significantly speed up the verification process.
As for user management, VDR administrators can control every action they take. In addition to detailed permissions, you will also be able to:
- Set time limits for user access to the document
- View automatic reports on detailed user actions
- Set permissions for specific file types
- Limit access by IP address
Ease of use
Companies generally don’t want to spend too much time adapting to a new system, so data rooms offer a simple interface, so they don’t slow down productivity or incur additional training costs:
- VDRs develop a user-friendly mobile interface
- Offer a trial period
- Support often offers training materials or webinars that provide a master class on using VDRs
- Flexible interface customization allows you to brand your VDR space to your business logo