![]() VDRs are widely used in the following industries: To put it simply, organizations trust the VDR to keep their most sensitive documents safe. A VDR’s capabilities to upload large volumes of documents, track and audit user and document activity, and set specific user permissions are vital for facilitating efficient and secure document sharing. The greatest advantage of a VDR is the peace of mind that comes from knowing that your confidential information-financial and HR information, intellectual property, your clients’ legal documents-will not be seen by third parties unless you’ve granted them permission to do so. We’ll further explore the various use cases for a VDR below. VDRs were a less costly and time-consuming method of housing and disclosing confidential company documents in a controlled manner.Īlthough VDRs were originally designed for M&A transactions, and are still used for M&A due diligence, they are now trusted for a broad range of use cases that require secure document sharing. ![]() In the early 2000s, virtual data rooms emerged as document storage and sharing transitioned online and from physical to electronic files. Physical data rooms were once used to control the disclosure of documents. Anyone working on an M&A deal who wished to view pertinent documents would have to book specific times in advance, and physically go to the data room. In the old days before the cloud and Software-as-a-Service (SaaS), data rooms were physical rooms in which documents for due diligence were stored and shared. In addition to aiding in security audits, this granular information about users and document activity is especially beneficial during sell-side M&A transactions or fundraising because it allows users to gauge the level of interest shared documents are inciting with bidders or potential investors. A virtual data room also provides detailed activity tracking, allowing its users to view which documents have been accessed by whom. VDRs have become an established solution for sharing sensitive financial documentation, intellectual property, case files for litigation, and so on. Virtual data rooms are ideal for supporting complex projects and business processes that require the disclosure and sharing of confidential documents with third parties beyond the firewall. ” These documents can be organized, shared and tracked all within the data room administrators’ control and discretion. What Is a Virtual Data Room?Ī virtual data room is “ an online repository of information that is used for the storing and distribution of documents. In the sections below, we will get you up to speed on what a virtual data room is, what it’s used for, who needs it, and why. Perhaps you’re new to the field of investment banking or transactional law, and your colleagues keep talking about “the VDR.” Or maybe you’re a business owner who is considering selling your company, and your M&A advisor has recommended a virtual data room to you to help facilitate the bidding and due diligence process. This guide is for professionals who want to familiarize themselves with virtual data rooms.
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