Virtual Data Rooms

words Al Woods

In the past, a data room had to be established, usually in a seller’s physical office, to provide an access point for all the business parties involved in various financial transactions.

It enabled attorneys representing both buyers and sellers to share a wide range of legal documents and information regarding processes such as multiple Mergers and Acquisitions. However, convenient, virtual data rooms are now rapidly becoming a standard feature in many industries including banking, pharmaceutical, renewable energy and mining.

Virtual Data Room

What is a Virtual Data Room?

It is a secure, online, cloud-based storage space where companies and their associated partners can place all the necessary sensitive documentation involved in a myriad of financial transactions, including due diligence, asset management and M&A. It offers highly secure storage that is accessible from anywhere in the world at a fraction of the cost involved in establishing a physical data room. It also incorporates the highest levels of security that easily surpass those of a physical location. Operating a reliable, secure computer system is usually far less expensive than hiring security guards to monitor a physical data room twenty-four hours a day. It provides easy, instant access to files that have been stored for a long time and significantly reduces the protection required against fire, flood and theft. Travel and accommodation expenses are completely dispensed with as the parties involved have virtual access wherever they are. And ultimately, a transaction can be processed fast and efficiently.

How a Virtual Data Room Benefits Business Transactions

Mergers and Acquisitions frequently involve multiple bidders. A virtual data room significantly increases accessibility of documents and files for all concerned parties. Attorneys in any global location can instantly access documentation, enabling the entire process to be completed with fast efficiency. The increased security of a virtual data room enhances the integrity of documents in Initial Public Offerings by restricting unauthorized access, printing and copying. Enormous quantities of documents such as those involved in legal proceedings, can be held securely indefinitely as virtual storage is limitless.

Creating a Virtual Data Room

Establishing a virtual data room for all types of transactions and asset management typically delivers improved efficiency and customer satisfaction. However, much depends on choosing the most suitable VDR provider from the three main types:

Legacy VDR Providers

These have primarily evolved from well-established printing companies that existed before the internet was created. They frequently offer an antiquated interface that is difficult to navigate, limited customer support and a payment structure that is based on the number of documents or pages being stored. They are more suitable for companies with a traditional view of how transactions should be conducted.

Generic VDR Providers

As the most basic of VDR providers, these often have limited security features that can admit undesirable third party access. As such, they are more suitable for low level businesses that do not have overly sensitive files. Many generic VDR providers lack due diligence tools such as audit reporting.

Modern VDR Providers

These VDR providers were created specifically to supply secure storage for vast amounts of sensitive material and began to emerge just over a decade ago. High level encryption security, advanced technological innovation, customization and low cost are regarded as standard features. They are often considered a suitable choice for a wide array of companies of at least medium size.

Advantages of a Modern VDR Provider

Intuitive, simplified navigation enables users to have a professional level of control over documents including facilities to restrict access to undesirable third parties. An unlimited number of virtual data rooms providers are always available, enabling companies to pursue several projects simultaneously. Additional features usually include two-factor authentication and dynamic watermark facilities. Modern VDRs allow enhanced communication between private equity companies and auditors, the sharing of litigation documents between legal teams and the use of extensive files for M&A, bid management and environmental auditing. Private equity companies can benefit from a wider collaboration between portfolios. The superior security is ideal for users who need to share sensitive files regarding regulatory bodies, clinical trials and licensing. Continuous customer support operates in real-time, 24/7, every day of the year.

The Right VDR Provider

Many Firmex Reviews highlight the advantage of the fixed fee system charged by such modern VDR providers. It is a straightforward pricing mechanism that encourages innovative companies to make multiple bold transactions. Such providers offer superior control, dynamic customization and an easy to use interface. The result is a highly efficient service offering the highest level of security, peace of mind, unlimited document storage, full control over file access and the confidence to use VDR tools due to reliable customer support.

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