Transactions between large companies (usually mergers and acquisitions) require enormous resources to prepare all documents and materials. Virtual data rooms help to simplify the whole process and make it more comfortable, faster, and more secure. This technology is a repository where companies upload their documentation. Lawyers and managers get acquainted with the files, check them, and then let them carry out the deal.
What is a virtual data room?
A virtual data room is an online technology that is designed to store and share documents. The abbreviated name is VDR. Inside the virtual space, there are all the necessary tools to work with any files, so when using them, employees do not need to download documents and open them on a computer.
Specialized data storage services arose during transactions between large companies because businesses often lost data during mergers and acquisitions.
Intellectual property and the enterprise’s financial condition are data that are not subject to disclosure. This is what virtual data rooms were created for.
Do not think that VDR is some innovation. Previously, a data room was an actual room where company employees came, brought documents, and lawyers and managers sat all day and sorted through the documentation.
Of course, the risk of losing or replacing documents was high before. And for the implementation of transactions required a lot of employees, a large room, and a lot of time.
VDR greatly simplifies transactions and makes it possible to quickly conduct them between companies located in different parts of the world.
How do virtual data rooms work?
Working with this technology has several successive stages:
- First, the necessary documents are loaded into the system. Then the company’s employees prepare all the required materials. Usually, the lists are preliminarily received from lawyers. During work, lawyers can also request additional materials – then they are also added to the system.
- The authorized person is given a login and password to access the system. There are many options for configuring user roles in virtual data rooms. Therefore, when working with them, someone can only upload files, someone can watch, and someone can edit.
- The user sees only those documents that are intended for him, and access to all other folders is closed.
- The user account is either disabled at the administrator’s discretion or retained (if the user is allowed to re-access documents).
It is noteworthy that the virtual data room stores a history of all actions that users performed during the session. Not a single file change, not a single document download will go unnoticed.
The main advantage of virtual data rooms is security. You can be sure that the data about your company will not fall into the wrong hands and will not be used anywhere.
- Careful setting of access rights of company employees to confidential information.
- Ability to encrypt and protect downloaded data from downloading and copying.
- The protection system includes several levels, so an outsider will not be able to get into the protected ecosystem with your files.
- Allows you to track any user activity, which minimizes the risk of “leakage” of information.
Thus, the virtual data room becomes a reliable and powerful tool for transactions. Furthermore, you can choose the technology that best suits your needs regarding features, storage space, and cost.