Virtual data rooms are not just a secure repository for your sensitive data, they are also a tool for mergers and acquisitions as well as due diligence. VDRs were created for this purpose only. Space makes this long and time-consuming process more organized and efficient. Although M&A requires a considerable amount of sensitive company data, data rooms can provide transparent access to third parties, while protecting the data reliably. In this article, we’ll take a closer look at how VDRs help with transactions.
Due Diligence – the traditional approach
Less than 30 years ago, the process of M&A, due diligence, and other transactions were done manually in a designated room. A huge amount of paper company documents were stored there and made available for analysis by investors and potential partners.
Naturally, it was too time-consuming to check and analyze a stack of papers sitting at a desk. This is resource-consuming and not at all economical for both parties concerned. The task was especially difficult when potential clients were far away from your physical data room, and your documents were awkwardly placed all over the place. Thus, the whole process is plunged into chaos, because investors have several people they hire for consultation, and all of them are not in the same place.
Digital Due Diligence
To simplify everything described above, Virtual Data Rooms were developed. These unique online spaces create all the necessary conditions to ensure that the analysis of all the necessary documentation for the transaction is as quick and slick as possible while guaranteeing the company absolute security and protection against leakage of important data. Another of its pluses is its flexibility. Now third parties do not need to travel thousands of kilometers to get to the place where all the papers are stored, they can access them at any time from their device.
In addition, the programs greatly increase the productivity of your company and improve all processes, for example, you can check with several investors at the same time and thereby increase your competitiveness, not to mention the high level of security that they provide. The secure virtual data room providers will take care of the quality of protection they provide and offer clients encryption features, secure document exchange, and full control during the verification and transaction process.
Security and Communication
As mentioned before, security is paramount for VDRs, the level of security in quality data rooms equates to protection during bank transactions, so entrepreneurs can have peace of mind for their sensitive data. The program also allows you to conveniently organize the necessary information so that it is convenient for both you and the third party.
To feel that everything goes under your control, VDR gives you, as an administrator, the ability to control access to and interaction with documents. For example, for convenience and security purposes, you can give a certain group of people access only to the data they are related to, i.e. lawyers to legal documents, financiers to financial documents, and so on. You can also set the document to “view only” status, or put a watermark on it to avoid data leaks.
Since it’s impossible to make a deal without proper communication, the VDR provides those opportunities as well. Providers use different methods for this, either encrypted chat or the Q&A function, where if one party asks a question, the other party is instantly notified by e-mail.