Why is a secure Virtual Data Room crucial in an M&A Deal?

The Virtual Data Room is an indispensable tool for M&A transactions. The tool greatly simplifies the work, speeds up negotiations, and allows employees of companies not even to gather in one office.

What is a virtual data room?

You might think that a virtual data room is something similar to cloud storage from the description. Indeed, in some way, it is cloud storage. VDR technology is designed to enable enterprises to upload data arrays there and be able to share them during large transactions.

However, the virtual data room is much more ancient than the data cloud. Only before, it was not virtual, and that’s it. Previously, a vast room was allocated for large transactions, all documents of interest were there, and many employees were busy only providing support for the transaction.

Modern data rooms are enormous; they are securely protected from hacking and offer a variety of functionality.

Who uses virtual data rooms in their work?

This technology is certainly not needed by ordinary users – it is pretty expensive and complex, and many functions will remain unused. Usually, legal entities involved in transactions between large companies or working with venture capital participate in opening a VDR.

In addition to the lawyers involved in the transaction, some employees (ensuring the submission of the necessary documents) and company managers are usually allowed to the virtual data room.

Virtual data room or cloud?

Sometimes companies don’t understand why they can’t use regular cloud storage instead of virtual data rooms. But, of course, the “clouds” have several obvious advantages: they are easy to use, significantly cheaper, and most users are familiar with them.

However, virtual data rooms benefit in several ways:

  • Data encryption. Thanks to this technology, the actual data you transmit are turned into a digital cipher. Even if the attacker manages to get some data from the virtual room (which is unlikely), he will not be able to deal with them;
  • Full activity control. VDR tracks who entered the room, at what time, and what he did there. Any changes are recorded in each document. Therefore, it is impossible to erase history.
  • User rights management. There are usually only 2-3 roles in cloud storage where you can partially restrict user rights. VDR offers a much more flexible system of parts, with which you can delimit the areas of work of sure participants in the process.
  • It has preinstalled file manager. You can view the files right in the room; they do not need to be downloaded or opened using specific programs. This is also an element of data protection.
  • Possibility of bulk loading. You can download several hundred documents at once with a simple drag-and-drop gesture from a folder on your computer.
  • Vast amounts of memory. Of course, now cloud storage can boast an awe-inspiring piece of memory. But VDR has so much more to offer—any amount you need.
  • Powerful burglary protection. User authentication settings allow you to protect the system from third-party interference maximally.

And, of course, a significant advantage of VDRs is their diversity. Each company can choose the option that offers the most convenient features for the best payment.